Fannie Mae & Freddie Mac

Posted on March 25, 2011 by admin_ecar

What is Fannie Mae?

The Federal National Mortgage Association (FNMA) (NYSE:FNM), commonly known as Fannie Mae, is a government sponsored enterprise (GSE) of the United States federal government. It is a stockholder-owned corporation authorized to make loans and loan guarantees.

It is the leading market-maker in the U.S. secondary mortgage market, which helps to replenish the supply money for mortgages and enables money to be available for housing purchases. As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the U.S.’s $12 trillion mortgage market.^[7] As a result, the corporations were affected particularly hard by the subprime mortgage crisis in late 2007 and early 2008.

The name “Fannie Mae” is a creative pronunciation of the company’s initialism that has been adopted officially for ease of identification. It is more than an informal nickname; FNMA refers to itself by this name.

What is Freddie Mac?

The Federal Home Loan Mortgage Corporation (“FHLMC“) NYSE:FRE, commonly known as Freddie Mac, is a Government sponsored enterprise (GSE) of the United States federal government. It is a stockholder-owned corporation authorized to make loans and loan guarantees. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market increases the supply of money available for mortgages lending and increases the money available for new home purchases. The name “Freddie Mac” is a creative acronym of the company’s full name that has been adopted officially for ease of identification.