20+ Difference Between Freddie Mac And Fannie Mae

The United States Congress established two mortgage finance corporations, Fannie Mae and Freddie Mac.

By providing easy access to cash and guarantees to thousands of banks, savings, loans, and mortgage firms around the nation, both federally supported organizations contribute to the mortgage market’s liquidity, stability, and affordability.

There are a lot of crossovers between Fannie Mae and Freddie Mac, but there are also some key distinctions.

Comparison Between Freddie Mac and Fannie Mae

ParameterFreddie MacFannie Mae
MortgageIn contrast to Fannie Mae, Freddie Mac receives them from a wide variety of financial institutions that are far less large and less well-known than Fannie Mae’s rivals. Freddie Mac’s competitors include both government agencies and private lenders. Freddie Mac was able to get them at a reduced cost as well.Mortgage loans obtained from firms that conform to more regular banking practices are the types of loans that Fannie Mae purchases from other businesses in order to achieve its goal.
Founded inIn 1970, Freddie Mac launched its first foray into the world of companies and organizations that were active in the commercial sector of the economy. This was an important year for the company.The years 1938 and 1939 were pivotal for Freddie Mac and Fannie Mae since those years marked the beginning of their separate careers in the financial industry. As a result, these years were crucial for both companies. Both of these establishments started off their respective activities in the same calendar year.
NamingIt is often believed that the Federal Home Loan Mortgage Corporation, which is also an acronym, is where this term came from, and it is possible that its use may be traced back to that institution at some point in time in the past.The abbreviation “Fannie Mae” originally stood for “Federal National Mortgage Association,” although nowadays, it is often used in place of the full phrase. “Fannie Mae”
RevenueSales of the company’s products and services brought in $17.2 billion, which led to a net income of $10.98 billion, which was the direct consequence of sales of the company’s goods and services, bringing in $17.2 billion.It has a total annual revenue of $22.9 billion, resulting in an annual net income of $80.64 billion. From one year to the next, there is not much variation in these values.

Major Differences Between Freddie Mac and Fannie Mae

What exactly is Freddie Mac?

The Federal Housing Finance Agency is most often known by its shortened acronym, Freddie Mac.

As part of the Emergency Home Finance Act of 1970, it was created to lessen banks’ exposure to interest rate fluctuations and increase the size of the secondary mortgage market.

The company was reorganized and changed into a shareholder-controlled entity with the passing of the Financial Institutions Reform, Recovery, and Enforcement Act in 1989. (FIRREA).

Freddie Mac Key Differences

  • In 1970, Congress authorized the creation of Freddie Mac to strengthen the nation’s home finance system and to guarantee a steady, low-cost flow of mortgage capital. 
  • Freddie Mac works in the secondary mortgage market in the United States, where it purchases loans from licensed lenders rather than making loans directly to customers. 
  • To keep money moving into the housing market, these lenders may provide additional loans to creditworthy customers. 
  • After purchasing mortgages, Freddie Mac bundles them into securities, which are subsequently sold to global investors.

What Exactly Is Fannie Mae?

A prohibitive down payment was required, along with short-term loans that would culminate in a high balloon payment unless the whole property was paid for in cash, which was unlikely.

Nearly one-fourth of all homeowners in the United States lost their properties to foreclosure during the Great Depression when banks were unable to provide credit, and a severe housing shortage gripped the country.

To address the need for consistent financing of housing, Congress established the Federal National Mortgage Association (FNMA) in 1938.

Fannie Mae Key Differences:

  • Fannie Mae facilitates the development of low-cost homes all around the United States. When it comes to mortgage loans in the United States, Fannie Mae is the go-to institution. 
  • Millions of Americans will be able to afford mortgage loans and multifamily housing because of our efforts. 
  • With our housing partners’ assistance, we ensure that people of all income levels have access to safe, decent, and affordable places to live throughout the nation. 
  • We’re in this together to ensure that everyone in the United States has a place to call home.

Contrast Between Freddie Mac and Fannie Mae


  • Freddie Mac- Freddie Mac was initially founded as a private company, but it was planned from the beginning for members of the general public to be able to join in on its operations.

    This was done with the intention of growing the size of the secondary mortgage market. The purpose of this action was to broaden the market for secondary mortgages, and it was carried out accordingly.
  • Fannie Mae- When Congress decided to establish Fannie Mae in the beginning, one of its primary objectives was to increase the number of customers who had access to alternative housing alternatives and mortgages offered at competitive rates.

    This objective was successfully completed by Fannie Mae thanks to an increase in the number of individuals who obtained mortgages.


  • Freddie Mac- Applicants’ yearly wages need to be higher than the region’s median income in order for them to qualify for a loan under the Possible Home program that Freddie Mac provides. Families with salaries ranging from low to moderate levels are eligible to apply for loans under this program, which will help them pay for the purchase of a home.
  • Fannie Mae- Borrowers with an annual income that is either the same as or lower than 80% of the region’s median income are eligible to apply for HomeReady loans from Fannie Mae. These loans are accessible to borrowers in all 50 states.

    This requirement guarantees that all potential borrowers who meet the conditions are eligible to receive the loan and can do so without difficulty.


  • Freddie Mac- Customers of community banks, credit unions, and other organizations of a similar size make up the bulk of Freddie Mac’s target market for the multiple products that it supplies; these customers make up the majority of Freddie Mac’s target market for the numerous items that it sells.

    These individuals are accountable for Freddie Mac obtaining the vast bulk of the company’s clients throughout the years (thrifts).
  • Fannie Mae- If it were up to the program’s administrators, the A.M. Home Purchase Program would much rather handle its financial operations by major commercial banks. This is because of the greater security that these institutions provide.

    In spite of this, it is not something that is going to take place even if the opportunity presents itself.


  • Freddie Mac- In 1970, Congress authorized the formation of a private firm, which was later given the name Freddie Mac after the agency that was going to be responsible for its operations.

    Its purpose was to contribute to the national aim of ensuring a steady and cost-effective flow of mortgage finance throughout the country. It is currently organized as a publicly listed company that also possesses a legislative charter at this point in time.
  • Fannie Mae- The federal government of the United States granted Fannie Mae its first authorization in 1938 to assist in ensuring a steady and low-cost flow of mortgage finance throughout the nation.

    The United States federal government has issued this permission. This corporation, which its shareholders hold, is now regulated by a legislative charter, and the charter governs both the corporation’s operations and the actions of its shareholders.

Frequently Asked Questions (FAQs)

Are there some types of loans that can’t be sold to Fannie Mae or Freddie Mac?

“Conforming loans” are mortgage loans that adhere to the standards set out by Fannie Mae and Freddie Mac and are thus eligible for acquisition by one of these GSEs. To be eligible for sale to Fannie or Freddie, it must satisfy a number of criteria.

Non-conforming loans are ones that fall short of certain requirements and so cannot be sold. Loan-to-value ratios, debt-to-income ratios, down payments, and kinds of properties are all taken into account when determining eligibility.

What does Fannie Mae really include, and how can laypeople understand it?

A government-sponsored enterprise (GSE) called the Federal National Mortgage Association (Fannie Mae) buys mortgage loans from smaller financial institutions like credit unions and smaller banks and then guarantees, or backs, these loans on the mortgage market for borrowers with low to moderate incomes.

Smaller financial institutions like credit unions and regional banks are Fannie Mae’s primary sources for purchasing home loans.

How do you qualify for a Fannie Mae loan?

Homebuyers also need to fulfill Fannie Mae’s minimal credit standards in order to be eligible for mortgages guaranteed by Fannie Mae.

For a single-family house that will serve as the borrower’s principal residence, the minimum necessary FICO score for a loan with a fixed interest rate is 620, while the minimum required score for an adjustable-rate mortgage (ARM) is 640.

Who precisely is in charge of Freddie Mac at this point?

Freddie Mac was given a charter by Congress that allowed it to function as a private business while still having the responsibility of advancing the public welfare.

The Director of the Federal Housing Finance Agency (FHFA) named the FHFA as the conservator of Freddie Mac on September 6, 2008. This designation was made by the FHFA (FHFA).

What precisely is the controversy with Freddie Mac?

The federally chartered mortgage financing giant Freddie Mac agreed, as part of a consent order that it reached with a federal regulator in December 2003, to pay a civil penalty of $125 million and implement measures to correct its accounting and governance problems.

The consent order was part of Freddie Mac’s settlement with the federal regulator. Everything that happened was a part of the settlement.

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