Get to know Fannie Mae, Freddie Mac and Ginnie Mae
- Posted: June 10, 2020
- By: Mara Rasumoff, Nations Lending
If you’re new to the housing industry or if you've just started looking for your first home, you’ll quickly realize how much new terminology there is to familiarize yourself with. For example, you may have heard the names Fannie Mae, Freddie Mac or Ginnie Mae thrown around and wondered why you don’t know who any of these people are.
Since Nations Lending is dedicated to making your home buying process as smooth as possible, we’re also here to help you better understand these names.. The first hint? They are names for government-sponsored mortgage companies, not someone’s great aunts and uncle!
Fannie Mae is also commonly referred to by its acronym “FNMA,” which stands for, “The Federal National Mortgage Association.” Ginnie Mae and its acronym “GNMA” stands for, “The Government National Mortgage Association.” And Freddie Mac was derived from its acronym, FHLMC, which stands for, “Federal Home Loan Mortgage Corporation.”
It’s unclear when along the line the acronyms turned into these popular nicknames, but you’ll often find people calling Fannie, Ginnie, and Freddie by first name basis. It definitely stuck for FHLMC in 1997 when the company decided to abandon the acronym and officially become Freddie Mac.
So, you might be wondering: “What do these names mean to me?” Well, these three private companies are secondary market lenders who back and secure home loans. More simply put, they make home ownership easier and more accessible to everyone.
They each work in different ways to better serve different home buyers. For example, Fannie Mae was created with the purpose of increasing lenders by purchasing bundles of loans (often called mortgage backed securities) primarily from big commercial banks. More lenders means more accessibility to mortgage loans.
Similarly, Freddie Mac was created with the purpose of expanding secondary market lenders by purchasing home mortgage loans from smaller banks and lenders. Ginnie Mae, an extension of the Department of Housing and Urban Development (HUD), also seeks to increase mortgage loan accessibility by dealing specifically with government-insured loans including FHA, VA, and USDA loans.
Try to remember that most home loans are tied to one of these major companies. Therefore, when one or any of these organizations decline, the accessibility of homeownership also declines and costs go up. Now that you are familiar with Fannie Mae, Ginnie Mae and Freddie Mac, it’s a good idea to refer to their web sites and keep up with the trends and/or updates to their regulations.
If you have any other questions about the home buying process, don't hesitate to call a friendly Nations Lending Personal Mortgage Advisor today at 1-877-816-1220.