The United States Congress has created two entities to assist the housing market by providing ready access to funds for the numerous financial institutions making home loans to would-be homebuyers.
Who are Fannie Mae and Freddie Mac?
Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation are commonly known as Fannie Mae and Freddie Mac.
In 1938, United States Congress chartered Fannie Mae to ensure an affordable and consistent supply of mortgage funds all over the country. In 1970, the United States Congress chartered Freddie Mac as a private company to likewise to provide a stable, liquid, and affordable environment to the nation 's housing market. Both Fannie Mae and Freddie Mac are currently, shareholder-owned companies operating under a congressional charter.
Fannie Mae and Freddie Mac are two of the largest sources of financing for U.S. citizens and help promote access to
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Also, Fannie Mae and Freddie Mac draw investors to the secondary mortgage market. These are investors who otherwise might not invest in mortgages. By investing, they help increase the money available for the housing market. That makes the secondary mortgage market more flexible and helps the homeowners and borrowers pay lower the interest rates.
Why are Fannie Mae and Freddie Mac in conservatorship?
In September 2008, as Fannie Mae and Freddie Mac became financially troubled during the financial crisis, both Fannie Mae and Freddie Mac were placed in conservatorship in a dramatic move by the U.S. government. As the U.S. economy weakened, both housing and mortgage markets experienced extreme drops in prices. This conservatorship is to help re-establish confidence in both companies and their abilities to perform their mission in providing affordable housing for