Freddie Mac is diving into subprime lending, ending months of speculation over how deeply the agency would go into the burgeoning market.

Freddie Mac and its rival, Fannie Mae, outlined their approaches to lending to tarnished borrowers at the Mortgage Bankers Association's annual meeting Tuesday in New York. Their participation could accelerate growth in a sector that has become a new frontier for many lenders and, ultimately, could bring rates down for borrowers.

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