They accomplish this by purchasing home loans from banks, bundling those loans and then selling them to investors, which enables banks to finance more mortgages.Ī loan that meets the requirements to be purchased by Fannie Mae or Freddie Mac may also be called a c onforming loan.įannie and Freddie set the standards for the home loans they are willing to buy and guarantee payment of principal and interest to make the loans attractive to investors. These federally chartered, privately owned corporations are regulated by the Federal Housing Finance Agency and aim to provide liquidity, stability and affordability to the market in all economic conditions.
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