government-sponsored enterprise that is in the home mortgage loan business. government bailed out Fannie and Freddie, the government has had a more direct say in these two businesses.Ī U.S. Since the 2008 financial crisis, when the U.S. housing economy, allowing more people to afford to buy homes than would otherwise be able if Fannie and Freddie did not exist. The two companies are part of a complex process that keeps money moving through the U.S. The main difference between Fannie and Freddie comes down to who they buy mortgages from: Fannie Mae mostly buys mortgage loans from commercial banks, while Freddie Mac mostly buys them from smaller banks that are often called 'thrift' banks.
Though separate companies that compete with one another, they have the same business model, wherein they buy mortgages on the secondary mortgage market, pool those loans together, and then sell them to investors as mortgage-backed securities in the open market. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) - i.e., private companies sponsored by the government - in the U.S.
