![]() What happened was that Fannie Mae split off into a private company, and a public institution called Ginnie Mae. ![]() Now you have capital again to go out and make more mortgages.įreddie Mac is the Federal Home Loan Mortgage Corporation (FHLMC.) It is also a GSE and it was created in 1970. But Fannie Mae comes in and says hey, if all of these 100 mortgages are good mortgages, I'll buy them from you. Once you've got 100 mortgages, you're done lending money, right? Too bad for the 101st person in your town who wants a mortgage. This is called "securitization." Basically let's say you run a bank, and you only have enough money to grant 100 mortgages. What Fannie Mae does is it buys mortgages from lenders, which then allows lenders to lend out more money. ![]() ![]() Fannie Mae is the Federal National Mortgage Association (FNMA, hence, Fannie Mae.) It was created as part of FDR's "New Deal." It's a government sponsored enterprise.
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