Freddie Mac, one of the nation’s largest government-sponsored enterprises (GSEs), remains committed to helping subprime borrowers out of risky loans and the current credit crunch, said Richard F. Syron, the GSE’s chairman and chief executive officer.
During a housing conference in Boston, Syron said lax underwriting standards and exotic loans were not the only culprits behind the market meltdown. Syron added that job losses in certain high-foreclosure areas, gaps in home prices and incomes, and increasing interest rates also played a significant role.

“It’s tempting to identify this entire problem as subprime lending, laying all the blame on lax underwriting by lenders, and on borrowers who overstated their income for low documentation loans,” Syron said. “But, in many ways the subprime dilemma is a symptom, fed by a variety of forces – particularly diminished housing affordability.”
Syron re-introduced some of the solutions Freddie Mac has conceptualized to address the subprime meltdown. Among them, the GSE remains committed to purchasing up to $20 billion in fixed-rate and hybrid ARM products that will be designed to give subprime borrowers more choices and escape routes from risky loans, according to Syron.
“We are acting to assist families caught up in the subprime crises and to make the market more stable and transparent for all borrowers,” Syron declared. “Our products currently under development and due to be introduced by mid-summer – will limit payment shock by offering reduced adjustable-rate margins; longer fixed-rate terms; and longer reset periods.”
Click here to read Syron’s full presentation.