Fannie Mae vs. Freddie Mac

What is the difference between Freddie Mac and Fannie Mae? Two major mortgage companies in the US are…

What is the difference between Freddie Mac and Fannie Mae?

Two major mortgage companies in the US are Freddie Mac and Fannie Mae. Even though they are two of the giants in this industry there is still a large percentage of homeowners with mortgages in the US who know nothing about either one of them. This is mainly because of the way in which these companies do business. Instead of working with consumers who borrow from them, they work with other lenders.

Both Freddie Mac and Fannie Mae play an important role in the mortgage industry in the United States and therefore in the country’s economy. They were established by the US government for the express purpose of buying mortgages from banks and other lending institutions so that there would be cash available for lenders to use in approving mortgages for the consumers. They account for about half of the home loans in the country to the tune of about $5.4 trillion.

How Freddie Mac is different from Fannie Mae

It is really difficult to find any differences between Freddie Mac and Fannie Mae because they operate for the same reasons. Fannie Mae dates back to 1938 when it was created by President Roosevelt to make sure that there was no shortage of funds for home loans. It became a publicly traded company in 1968. Freddie Mac was established in 1970 to provide competition for Fannie Mae and to ensure that it did not maintain a monopoly of the loans that were backed by government funds.

There is a difference between the two companies. Fannie Mae focuses its activities on working with lenders, but Freddie Mac concentrates on savings and loans, which are known as thrifts. Under the regulations of Fannie Mae a single owner of up to ten units can have loan guarantees on multiple properties. Under the regulations of Freddie Mac, this is not permitted on more than four properties.

Borrowers can obtain a home loan from Fannie Mae with as little as 3% down payment, but the lowest down payment available from Freddie Mac is 5%.


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