Fannie Mae and Freddie Mac have been in the news quite a bit over the past few years, so it’s a good time to do a refresher on who they are and what role they play in the real estate market.
Who Are Fannie Mae And Freddie Mac?
Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. They were originally created to raise homeownership levels and increase the availability of affordable housing.
Fannie and Freddie don’t sell mortgages directly to homeowners. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages.
In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government.
How Do Fannie And Freddie Impact Real Estate?
What’s Going To Happen To Fannie And Freddie?
Fannie and Freddie’s future is uncertain. An amendment to the bailout legislation passed in 2012 which will require both to wind down by 2018. But this will not happen soon, if at all.
Congress must agree on a plan, which could take years, and then the market’s dependence on the companies and the financial backing they provide must be reduced.
As of the end of 2013, Fannie and Freddie will have repaid nearly all of the $187 billion dollar bailout loan back to taxpayers. In 2013, Fannie and Freddie made more than $100 billion and are involved in more than half of all new mortgages.
If you have further questions on this topic, please us.
* Courtesy of SNMC Mortgage