Where does Fannie and Freddie get their funding?
Fannie Mae and Freddie Mac exist to support the U.S. home mortgage system. But they don’t lend money to individuals. Instead, they buy mortgage loans from the banks and financial institutions that originate them.
How does Freddie Mac make money?
Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending.
Is Fannie Mae a good thing?
What are the benefits of a Fannie Mae loan? Fannie and Freddie loans have competitive interest rates and low down payment options. But the biggest benefit of Fannie and Freddie loans: They are the mortgages most lenders prefer to make.