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Fannie Mae, Freddie Mac and the FHFA
Fannie 1938; conservatorship 2008· Institution or agency
Fact, law or dataA rule, statute, definition or measured number.
Two government-sponsored companies that buy and guarantee home mortgages, plus the federal agency that has run them since 2008.
See it on the Money & Finance map →How it works
Fannie Mae was created in 1938 to buy New Deal FHA loans; it became shareholder-owned in 1968, and Congress created Freddie Mac in 1970. They buy 'conforming' loans (up to $832,750 in most areas in 2026), bundle them into mortgage-backed securities and guarantee investors against default for a fee. Together they back roughly half of US home mortgages, about $7 trillion, and are leading apartment lenders. The Federal Housing Finance Agency (FHFA) regulates them and has run them as conservator since 2008.
Why it matters
They are a main reason the 30-year fixed, prepayable mortgage is standard in the US and rare elsewhere, and their rules decide who qualifies and at what rate.
Think of it like
Like a buyer of stabilized properties: lenders originate loans, sell them on, get their capital back and start the next deal.
Facts, rules and data
FHFA loan-limit announcements and conservatorship reports; the companies' SEC filings; Treasury's 2008 support agreements. Individuals get agency MBS exposure mostly through bond funds; broad bond index funds hold about a quarter in them.
Debates and risks
Whether and how to release them from conservatorship, discussed again in 2025–26, and whether an explicit federal guarantee would then be needed, remain open.
Connections (5)
▸Mortgages and the 30-year fixed-rate loan are bought and pooled by Fannie Mae, Freddie Mac and the FHFAFact, law or data
The connection
A lender makes a mortgage that meets Fannie or Freddie standards (credit score, down payment, debt-to-income ratio, loan-size limit), then sells it to them for cash or swaps a pool of such loans for their guaranteed securities. The lender gets its money back to lend again, which keeps 30-year fixed loans widely available.
When and why
Since 1938 for Fannie (FHA loans) and 1970 for Freddie; today thousands of US banks and mortgage companies sell them loans every day.
How we know
Their SEC filings report purchases and guarantee books; lenders' underwriting systems, Fannie's Desktop Underwriter and Freddie's Loan Product Advisor, encode the standards.
Debates and risks
How much they lower mortgage rates is debated; studies of the gap between conforming and larger 'jumbo' loans often find a quarter-point or less.
▸Mortgage-backed securities (MBS) mostly carry guarantees from Fannie Mae, Freddie Mac and the FHFAFact, law or data
The connection
Fannie and Freddie pool thousands of conforming mortgages into securities and guarantee that investors get principal and interest on time, even if homeowners default. Investors still carry interest-rate and prepayment risk, but not credit risk, which makes these 'agency MBS' nearly as easy to trade as Treasuries.
When and why
Freddie issued its first MBS in 1971 and Fannie in 1981; since 2019 both issue a common 'uniform MBS'. Ginnie Mae guarantees the government-insured remainder.
How we know
SIFMA and FHFA data show about $9 trillion of agency MBS outstanding, most from Fannie and Freddie; the Fed bought trillions of them in quantitative easing.
Debates and risks
Whether investors would demand higher yields, raising mortgage rates, if Fannie and Freddie left conservatorship without an explicit federal guarantee is debated.
▸The 2008 global financial crisis forced into conservatorship Fannie Mae, Freddie Mac and the FHFAFact, law or data
The connection
Fannie and Freddie backed about $5 trillion of mortgages with thin capital and also held risky subprime-linked securities. As home prices fell and losses mounted, investors feared they would fail. In September 2008 their new regulator, FHFA, took control as conservator, and Treasury promised capital, eventually about $191 billion, to keep them paying.
When and why
Washington, September 6–7, 2008; Treasury Secretary Henry Paulson and FHFA director James Lockhart, using powers from the July 2008 Housing and Economic Recovery Act.
How we know
FHFA conservatorship documents and Treasury's support agreements; the companies' filings show the draws and about $300 billion in dividends paid to Treasury by 2019.
Debates and risks
Whether they helped cause the crisis is debated: the official inquiry's majority said they followed rather than led Wall Street, while dissenters blamed government housing goals.
▸Agency apartment loans: Fannie Mae DUS and Freddie Mac Optigo are bought, guaranteed and capped by Fannie Mae, Freddie Mac and the FHFAFact, law or data
The connection
Fannie Mae and Freddie Mac buy apartment loans from approved lenders, or guarantee bonds backed by them, charging a guarantee fee built into the rate. The FHFA, their regulator and conservator since 2008, sets yearly purchase caps: $88 billion each for 2026, with workforce-housing loans exempt.
When and why
Fannie's DUS program since 1988; Freddie's lender network, branded Optigo in 2019; both companies under FHFA conservatorship since September 2008.
How we know
FHFA's cap announcements (November 2025 for 2026), the companies' 10-K filings, and their published multifamily volume reports.
Debates and risks
How the agencies' apartment role would change if they exit conservatorship, and whether caps crowd out or support private lenders, is debated.
▸Government-backed property loans: agency, HUD and SBA include apartment loans backed by Fannie Mae, Freddie Mac and the FHFAFact, law or data
The connection
Fannie Mae's DUS program lets approved lenders underwrite apartment loans and share losses, often up to a third; Fannie then securitizes them. Freddie Mac's Optigo lenders originate loans that Freddie buys and pools into K-deal bonds, selling the riskiest slices to private investors. The FHFA caps each company's yearly volume.
When and why
DUS since 1988; Freddie K-deals since 2009; FHFA conservatorship since September 2008. Lenders include Walker & Dunlop, Berkadia and Greystone.
How we know
Fannie Mae and Freddie Mac annual reports, FHFA's annual volume caps, and deal documents for DUS MBS and K-deals.
Debates and risks
Plans revived in 2025 to release Fannie and Freddie from conservatorship leave open how their apartment lending, and its federal backing, would change.