If you’re a realtor or in any way associated with the real estate industry you’ve probably heard the names Fannie Mae and Freddie Mac quite a bit. These two names are not associated with people but are actually the nicknames of two government-sponsored enterprises (GSEs). Fannie Mae is the nickname for The Federal National Mortgage Association and Freddie Mac is the nickname for the Federal Home Mortgage Corporation, according to a website called History News Network. These GSEs are shareholder-operated and privately owned but financially protected by the Federal Government. According to the website listed earlier this protection includes; US Treasury granting credit, and exemption from – SEC oversight, and both local and state income taxes. Now that you know what they are you may be wondering where they originated from and our blog will try to answer as many questions as you may have.
Origins of Fannie Mae
Fannie Mae dates back to 1938 as apart of the New Deal that was created by Franklin Roosevelt during the Great Depression. The real estate market was among many things that took a hit during the Great Depression and Fannie Mae was created to try to repair that decrease in home sales. It did so by using federal money in local banks to finance home mortgages. According to Fannie Mae’s website, in 2013 it created: “an increase in home prices, a decline in serious delinquency rates, and updated the company’s allowance for loan losses.”
Origins of Freddie Mac
Not quite as old as Fannie Mae, Freddie Mac dates back to 1970. Directly quoted from the Freddie Mac website its mission is to:
“stabilize the nation’s residential mortgage markets and expand opportunities for homeownership and affordable rental housing. Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market.”
Now that you have a general idea and back ground of what Freddie Mac and Fannie Mae are your next big questions probably are; Why Should I Care?, or How Does This Effect Me? A website called The Mortgage Professor gives two people this mainly effects: potential borrowers and “low or low-to-moderate income borrowers”. For potential borrowers the interest rate will probably be ¼ lower than it would be without GSEs. Low or low-to-moderate income borrowers are potentially able to acquire loans through GSEs; depending upon how many loans the GSEs are committed to, which varies by areas.
If you’re still wondering more about these loans and how they may vary from state to state, I can help. I hope this blog has answered some of your questions but if you still want to know more feel free to email me your questions at Jim@Jimdolanch.com or call me directly at (724) 288-8800. I’ll try my best to answer any further questions you may have.
Invest in Pittsburgh Real Estate!
If you’re ready to invest in your own Pittsburgh home, make sure to contact me, Jim Dolanch, now! I’m your dedicated Pittsburgh real estate expert and I would love to help you at every step of the home-buying process.
Until next time,