Meet Fannie and Freddie

Fannie Mae, the Federal National Mortgage Association (FNMA), was established by Congress in 1938 to provide local banks with federal money to make mortgage loans. The government aimed to shore up a U.S. housing market devastated by foreclosures in the Great Depression. Fannie Mae and Freddie Mac buy primary mortgage loans (meaning no equity lines of credit or second mortgages) to hold in their portfolios or to securitize and resell as mortgage-backed securities. In the latter process, they guarantee the mortgage loans and collect fees for securitizing and selling the bundled mortgages. The purpose of this is to expand the pool of funds in the mortgage market, which Fannie and Freddie did.
Freddie Mac, the Federal Home ...

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