What are Fannie Mae and Freddie Mac?


Creative Commons License photo credit: *clairity*

If you have been watching the news over the past few months, you have probably heard the phrase ?Fannie Mae and Freddie Mac? time and time again. And while most people are aware that this phrase has something to do with the financial and mortgages industries, they are not exactly sure what. To go along with this, most people have no clue on whether or not Fannie Mae and Freddie Mac affect their money or the way that they live. Fortunately, learning the inner workings of these organizations is not difficult.

Fannie Mae

According to their website, ?Fannie Mae is a private, shareholder-owned company that works to make sure mortgage money is available for people in communities all across America. We do not lend money directly to home buyers. Instead, we work with lenders to make sure they don’t run out of mortgage funds, so more people can achieve the dream of homeownership.”

In terms of assets, Fannie Mae is the second largest corporation in the United States. Their website also goes on to explain that the organization is the second largest source of home mortgage financing.

Fannie Mae was created in 1938 by the Federal government as a way of creating more money for mortgages through a secondary market.

Freddie Mac

According to their website, ?Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage pass through securities and debt instruments in the capital markets. By doing so, we ultimately help homeowners and renters get lower housing costs and better access to home financing.”

Freddie Mac is also known as the Federal Home Loan Mortgage Corporation. Generally speaking, Freddie Mac purchases mortgages on the secondary market, brings them together, and then sells them to investors.

Now that you have a better idea of the details behind Fannie Mae and Freddie Mac, you can determine whether or not these organizations have any bearing on your finances.