Wednesday, August 24, 2011

Explaining Fannie Mae & Freddie Mac

From The Detroit Free Press:

Fannie Mae and Freddie Mac are publicly traded companies that guarantee the majority of new mortgages in the U.S.  Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) were taken over by the government in 2008 after billions of dollars in losses and years of mismanagement at a cost to taxpayers of $141 billion.
Fannie and Freddie operate in the U.S. secondary mortgage market. They don't sell mortgages directly to homeowners; they buy mortgages from banks and other lenders, which can use the money to issue new home mortgages.


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