Who are Fannie Mae and Freddie Mac?

Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. They were originally created to raise homeownership levels and increase the availability of affordable housing.

Fannie and Freddie don’t sell mortgages directly to homeowners. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages.

In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government.

How do Fannie and Freddie impact real estate?

• They contributed to the financial crisis and real estate downturn, by loosening underwriting standards, buying and guaranteeing risky loans and increasing purchases of mortgage-backed securities.
• They influence mortgage interest rates and the availability of home loans. Freddie, Fannie and the Federal Housing Administration together now guarantee about 90 percent of all new mortgages, far above their historic level. 

If you have questions, please give me a call or email me. I’m happy to help.

Links:

Freddie Mac

http://topics.nytimes.com/top/news/business/companies/freddie_mac/index.html

Making Home Affordable

http://www.makinghomeaffordable.gov/tools/does-fannie-or-freddie-own-your-loan/Pages/default.aspx

Federal Housing Administration

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory