Been wondering who they are and what they do? We are hearing reference to them today so much in our news. They are two organizations of great importance in that they are a source of funds for primary lenders. When a primary lender makes a loan to the client, often the loan is sold to one of these organizations, which action replaces the primary lender’s capital. This replacement of capital enables the primary lender to continue to make loans. This is what is referred to as the “secondary” market.
Freddie Mac (Federal Home Loan Mortgage Corporation) used to provide funds to the savings and loan industry. Later, after the savings and loan industry was no more, Freddie Mac expanded and became and source of funds for conventional home loans.
Fannie Mae (Federal National Mortgage Association) is now the largest purchaser of conventional home loans (not included are FHA and VA loans).
Both organizations sell stock, notes and bonds to the public to raise money. The money they raise is used to purchase home loans on the secondary market as described above.
Both organizations are privately owned, but both are regulated by the government.
This is a most simplified, but accurate, description of Freddie Mac and Fannie Mae. For information on St. George Utah Real Estate – please contact us.
