If you’ve been thinking of buying a home, you may have heard the names Fannie, Freddie, and Ginnie thrown around in relation to home mortgages. We’re going to share with you the story behind these names, how they are different from each other, and why prospective homeowners should know about them.
For starters, all three of these entities are government sponsored mortgage companies. They help free up funding for lenders so ultimately more people are eligible for mortgages. Like many government based entities, their names are based on acronyms. Here’s what else you should know:
The story behind Fannie, Freddie, and Ginny
Fannie Mae came first. Over 80 years ago, as part of FDRs New Deal, the Federal National Mortgage Association was created ( and FNMA became Fannie Mae). Fannie Mae purchases mortgage loans from larger institutions ( big banks) so lenders can turn around and take on new mortgages, creating more homeowner opportunities for Americans. Freddie Mac (Federal Home Loan Mortgage Corporation, FMCC) expanded this program in the 1970s to include smaller banks and lenders, and both kinds of loans are generally conventional loans.
Both organizations are privatized and then you have Ginnie Mae. It’s the government extension of the department of HUD (Housing and Urban Development) called the Government national Mortgage Association (GNMA) , and deals with non-conventional government insured loans like FHA, VA and USDA loans
How Freddie and Fannie assist lower income homeowners
Both Fannie and Freddie set regulations that banks and lenders must abide by, and they offer programs for borrowers who fall under moderate to low income categories. HomePath Mortgage, and Home Possible mortgages are Fannie and Freddie’s answer offering these borrowers mortgages that they could qualify for.
For first time homebuyers looking at purchasing foreclosure properties, HomePath.com and HomeSteps.com offers sales of these properties at a discount.
EPM is all about empowering and educating first time home buyers so they can go into the process confidently, prepared to make a great investment in their future. To learn more about this post or any other information shared on our blog, contact a lender at EPM today.