Q&A: Fannie & Freddie
 What do they do?
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They buy and guarantee mortgages from banks. Some of the mortgage debt bought by Fannie and Freddie is pooled and sold to investors.

In this case, Fannie and Freddie essentially act as middlemen between banks and investors. Fannie and Freddie hold or back more than $5 trillion in mortgages, about half the outstanding mortgage debt in the United States.