Who are Fannie Mae and Freddie Mac?


The Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) are the two largest mortgage finance lenders in the US. They operate in the so-called secondary market buying mortgages from retail lenders.

Although they are privately-owned, they are considered GSEs - government sponsored enterprises and as such benefit largely from Federal Government support and protection. Some of those privileges include huge credit line from the US Treasury and tax and oversight exemptions.

Fannie Mae began operating during the Great Depression when lenders were totally reluctant to lend home loans. Due to its capability to borrow funds at low rates from foreign investors, Fannie Mae was able to offer competitive low rates and low down payment.

Largely benefiting as GSEs and enjoying support from the general public, Fannie Mae and Freddie Mac have been experiencing unparalleled growth and their assets are estimated to 45% higher than those owned by the US largest bank. However, this is counterbalanced by the fact that their own indebtedness equals to around 46% of the US national debt.

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