What do Fannie Mae and Freddie Mac have in common?

Fannie Mae and Freddie Mac share the characteristic of being Government Sponsored Enterprises (GSEs) that are specifically chartered to support the housing market in the United States. Their primary function is to buy loans—such as mortgages—from lenders, which helps to free up capital for those lenders to issue new loans. This buying and selling of loans are crucial for maintaining liquidity in the mortgage market, ultimately enabling more homebuyers to access financing.

The roles of Fannie Mae and Freddie Mac are vital in supporting homeownership, as they help ensure that lenders have the resources they need to offer affordable mortgage options to consumers. By purchasing these loans, they help guarantee that enough money is circulating within the mortgage market, which can lead to lower interest rates and increased availability of mortgages for potential homebuyers.

While they focus mainly on conventional loans, they do not exclusively deal with them, as they can also back loans that conform to their guidelines but may include other types of mortgages. Additionally, they are not private financial institutions; rather, they are established and regulated by government policies. Lastly, they do not provide mortgage insurance; instead, they provide a liquidity outlet for lenders. Therefore, their commonality as GSEs that buy loans is the most accurate representation of their