Fannie, Freddie & Ginnie .... Household Names ... but, What Are They??

Fannie Mae, Washington DC

You've heard these terms before....  but what are they exactly?   

Fannie Mae                All About Fannie

President Franklin Roosevelt's New Deal established the Federal National Mortgage Association (Fannie Mae) in 1938 as a federal agency in the wake of the Great Depression.

Its purpose was to bring liquidity, stability and affordability to the U.S. housing and mortgage markets.

Congress converted Fannie in 1968 to a publicly held corporation to help balance the federal budget.

Freddie Mac                   Freddie FAQ    

To compete against Fannie Mae's domination of the secondary market and further lower housing costs, Congress chartered the Federal Home Loan Mortgage Corporation (Freddie Mac) as a public corporation in 1970.


What do they do?       Fannie & Freddie at Work in the Secondary Market


Freddie and Fannie have similar Congressional mandates, charters and regulatory structures.

 Both entities buy mortgages from lenders and package them into mortgage-backed securities that are sold to investors with a guarantee against default. This creates a secondary market, allowing mortgage lenders to use the freed-up funds to make more home loans.

Ginnie Mae                 All About Ginnie

The Government National Mortgage Association (Ginnie Mae) was established by Congress in 1968. Unlike its GSE siblings, Ginnie does not purchase loans, but guarantees investors the timely payment of principal and interest on mortgage-backed securities containing federally insured loans — mainly FHA and VA loans.

Recently

In September 2008, the U.S. government rescued Fannie Mae and Freddie Mac from the brink of economic failure and placed them into conservator ship with the Federal Housing Finance Agency (FHFA). Some members of Congress have called for the gradual elimination of Fannie and Freddie to leave mortgage finance completely in the private sector. A Treasury Department report on the future of Fannie and Freddie will be delivered to Congress in the first half of February 2011.

info provided by:   Lynn Ashe, Prospect Mortgage
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