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Fannie Mae was founded - in 1938 - during the Great Depression with a simple purpose in mind: to give lower- and middle-income Americans more access to the Great American Dream of home ownership with a reasonable interest rate.
It did it by guaranteeing if a homeowner defaulted on a loan the bank would get paid.
The money they provide to banks to lend to people also is supposed to help stabilize the mortgage market in times of stress by ensuring sufficient resources for loans.
First established as a government agency, Fannie Mae in 1968 became a private, shareholder-owned company with a charter from Congress requiring the company to support the housing finance system. Freddie Mac was established in 1970 to expand the secondary market for mortgages in the U.S.
Today Fannie and Freddie hold a pivotal place in the home loan market - one that has grown to include special advantages, such as guaranteed lines of credits from the U.S. Treasury, exemption from state and local taxes
and limited government oversight.
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