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Freddie Mac Begins Creating Bonds Backed by Modified Mortgages

May 23 (Bloomberg) -- Freddie Mac, the government-controlled mortgage financier, said that it’s begun packaging modified home loans into bonds that it guarantees, with $1 billion of securitizations already completed.

The “vast majority” of the mortgages reworked to help homeowners had previously been contained in its bonds and were bought out after delinquencies, the McLean, Virginia-based company said today in an e-mailed statement. Since November 2011, the firm has been repackaging into bonds those loans that were once delinquent and began performing again without modifications, it said.

“Securitizing loans that have been modified and are now performing will allow Freddie Mac to better manage its mortgage-related investments portfolio,” Adama Kah, a vice president of distressed assets management, said in the statement. “We are taking another important step that creates liquidity and taxpayer value.”

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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