Sometimes, talking about loans can feel a lot like planning a family reunion with names like Sallie and Freddie floating around. However, these are names of organizations that you should get familiar with whether you are thinking about looking into a mortgage or if there is a student in your life. Today we’re going to be going over each of these organizations so that you can know who they are and use this knowledge to your advantage. Let’s take a look.
Who is Fannie Mae?
Fannie Mae is the nickname given to The Federal National Mortgage Association, or FNMA. This enterprise is sponsored by the federal government. It originated as a part of the New Deal back during the Great Depression with the purpose of providing local banks with the finances to help facilitate home mortgages. They do this by providing mortgage-backed securities, which allow lenders to invest their assets into more lending by reducing the need to rely on locally based savings and loan associations.
Who is Freddie Mac?
Known as “the brother” of Fannie Mae, Freddie Mac is the nickname given to The Federal Home Loan Mortgage Corporation, or FHLMC. This organization is also used to help expand the secondary market for mortgages. Freddie Mac works by purchasing mortgages on the secondary market and then selling them as an MBS to investors within the open market.
Who is Sallie Mae?
Though Sallie Mae is still in the loan business, these loans are for students and their education. The SLM Corporation, originally knowns as the Student Loan Marketing Association, is a publicly traded corporation that offers private student loans. Originally, this corporation was meant to service federal education loans back in 1973.
Why is it important to know these names?
Freddie Mac and Fannie Mae are very important names within the mortgage world. Between their historical significance and their effects on the open market at large, there is a lot of value in knowing as much as you can about them so that you can make informed decisions on how to navigate the housing market.
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