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What about Fannie Mae and Freddie Mac?

Fannie Mae Graphic
Consumer Download Guide
  • Fannie Mae and Freddie Mac are both government-sponsored enterprises (GSEs) created to enhance the availability of mortgage credit in the United States. While they have similar goals and functions, there are some key differences between the two:

  • Origins: Fannie Mae, or the Federal National Mortgage Association, was established in 1938 as a government agency but later privatized in 1968. Freddie Mac, or the Federal Home Loan Mortgage Corporation, was created in 1970 to provide competition to Fannie Mae and increase liquidity in the mortgage market.

  • Ownership: While both Fannie Mae and Freddie Mac were originally government-owned, they are now publicly traded companies. However, they are still subject to oversight by the Federal Housing Finance Agency (FHFA), which regulates their activities and ensures their safety and soundness.

  • ​Business Model: Fannie Mae and Freddie Mac both operate in the secondary mortgage market, purchasing mortgages from lenders and then either holding them in their portfolios or packaging them into mortgage-backed securities (MBS) for sale to investors. Fannie Mae primarily focuses on conventional loans, while Freddie Mac specializes in both conventional and government-backed loans, such as FHA and VA loans.

  • Regulatory Structure: While both Fannie Mae and Freddie Mac are regulated by the FHFA, there are slight differences in their regulatory structures. For example, Fannie Mae is subject to the oversight of the Department of Housing and Urban Development (HUD) and the U.S. Treasury Department, while Freddie Mac is overseen by the FHFA and the U.S. Treasury Department.

  • Market Share: Historically, Fannie Mae and Freddie Mac have had similar market shares in the secondary mortgage market. However, there have been fluctuations over time, and their market dominance can vary depending on various factors such as economic conditions, government policies, and changes in the housing market.

Freddie Mac Graphic

Overall, while Fannie Mae and Freddie Mac have some differences in their operations and structures, they both play crucial roles in the U.S. housing finance system by providing liquidity to the mortgage market and helping to make homeownership more accessible to a broader range of borrowers.

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