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Federal National Mortgage Association (Fannie Mae):
The Federal National Mortgage Association, also known as Fannie Mae, is a government-sponsored organization that helps make it easier for people to get home loans by buying and guaranteeing mortgages from lenders.
Imagine a bank gives out a mortgage to help someone buy a house. Fannie Mae can then buy that mortgage from the bank, which gives the bank more money to lend to other homebuyers. This process helps to keep the flow of money available for mortgages and makes it easier for people to get loans to buy houses.
"A Deep Dive for Real Estate Agents and Appraisers"
Fannie Mae and Freddie Mac are both government-sponsored enterprises (GSEs) with similar missions, but they have some differences in their operations and the types of mortgages they focus on.
Creation and Purpose: Fannie Mae was created in 1938 as part of the New Deal to support the housing market during the Great Depression, while Freddie Mac was established in 1970 to expand the secondary mortgage market and increase competition.
Types of Mortgages: While both GSEs purchase conventional mortgages, Fannie Mae focuses more on purchasing mortgages from large commercial banks, while Freddie Mac focuses more on purchasing mortgages from smaller banks and thrift institutions.
Mortgage-Backed Securities: Both Fannie Mae and Freddie Mac issue mortgage-backed securities (MBS), which are financial instruments backed by the mortgages they purchase. However, they have different names for these securities. Fannie Mae issues "Fannie Mae MBS," while Freddie Mac issues "Freddie Mac PCs" (Participation Certificates).
Loan Programs: Fannie Mae and Freddie Mac have their own unique loan programs, although many of their offerings overlap. For example, Fannie Mae has the "HomeReady" program, which targets low- to moderate-income borrowers, while Freddie Mac has the "Home Possible" program with similar goals.
Despite these differences, Fannie Mae and Freddie Mac share a common objective: to provide liquidity, stability, and affordability to the U.S. housing market by purchasing and guaranteeing mortgages from lenders, allowing them to lend more to homebuyers.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In a land where houses are sought,
Fannie Mae steps in and offers support.
They buy the loans from banks, you see,
And guarantee them, oh so keenly.
When a bank lends to a buyer with glee,
Fannie Mae swoops in, helping the spree.
By buying the loans, they set banks free,
To lend even more, to folks like you and me.
So thank you, Fannie Mae, for your aid,
Helping dreams of homeownership to be made!