Freddie Mac allows "piggyback" loans, increasing risk

While subprime loans have been grabbing the headlines, Freddie Mac executives are disclosing information about another type of loan that could open the government-backed institution to more risk. Freddie Mac is prohibited by federal law from purchasing mortgages that involve more than 80% of a house's value. For the past several years, however, the firm has allowed borrowers to get a second loan, or "piggyback" loan, to cover the remaining 20%. The scheme could leave Freddie Mac exposed to larger losses.

View Full Article in:

Washington Post (tiered subscription model), The

Published in Brief: