"Fannie Mae and Freddie Mac are important entities within the U.S. housing market, frequently mentioned in discussions about home financing and market stability. Yet, their true roles and origins are often misunderstood. Established during times of economic turbulence, these institutions were designed to support the housing finance system, with the goal of making homeownership more attainable for Americans. THEIR IMPORTANCE IN THE HOUSING MARKET These government-sponsored enterprises (GSEs) play a crucial role in the housing market by ensuring that lenders have a steady flow of funds."
"The Federal National Mortgage Association, commonly known as Fannie Mae, was born out of the Great Depression in 1938. The housing market was in disarray, with widespread unemployment and foreclosures. Fannie Mae was created as part of President Franklin D. Roosevelt's New Deal, aiming to restore confidence in the housing market by providing federal backing for home loans. Initially, Fannie Mae's mission was to act as a secondary market for Federal Housing Administration (FHA) insured loans."
Fannie Mae and Freddie Mac are government-sponsored enterprises that ensure mortgage lenders have access to capital. Their role is to create liquidity by purchasing mortgages and enabling banks to issue more loans at competitive rates. Fannie Mae originated in 1938 during the Great Depression to stabilize the housing market and support FHA-insured lending. The initial mission involved buying FHA loans so banks could replenish funds for new mortgages. Legislative changes, notably the Housing and Urban Development Act of 1968, converted Fannie Mae into a privately owned corporation while preserving its public mission. The change allowed expansion into conventional mortgage purchases and the issuance of mortgage-backed securities.
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