Fannie Mae: Federal National Mortgage Association, founded in1938;
Freddie Mac: Federal Housing Loan Mortgage Corporation, established in1970;
Both of these enterprises were founded by the federal government, and GSE (government-funded entity) was established to support the development of loan business, so that banks can safely lend and people can borrow money. It seems that Freddie Mac is mainly to check and balance Fannie Mae, followed by Ginnie Mae, which mainly provides low-interest loans to veterans to ensure the safety of loans. It is more like a loan insurance company and is rarely mentioned.
Running die
Fannie Mae and Freddie Mac are mortgage companies. The main mode of operation is: individuals need housing loans from banks, and banks set a certain loan interest rate to lend. But at this time, banks have to bear the risk of public non-repayment, which may lead to the break of the capital chain. At this time, the bank will transfer the risk and sell the loan securities to Fannie Mae and Freddie Mac, and the repayment risk will be transferred to Fannie Mae and Freddie Mac. At this time, Fannie Mae and Freddie Mac sold the purchased loans to investors to share the risks. They mainly have two businesses:
Mortgage-backed securities
Keep the loan: buy the loan yourself, bear the risk yourself, and earn the difference between the capital cost and the portfolio loan.
Both Freddie Mac and Fannie Mae were established by the US federal government. When it sells securities, people will naturally believe that it is low-risk, so their two companies also took off at random when the real estate industry in the United States developed rapidly.
profit model
1. For the bank, it is responsible for helping Fannie Mae and Freddie Mac recover the loan funds and returning the funds to Fannie Mae and Freddie Mac after deducting a certain handling fee.
2. For Fannie Mae and Freddie Mac, the profit mainly comes from credit guarantee, which guarantees the lender to repay the principal and interest on schedule. If the repayment is not made on time, it will be paid to the investor. Exchange cash flow for investors and deduct a certain guarantee fee.
? Cause of collapse
Because there are various lending institutions (Fannie Mae and Freddie Mac, etc.). ), the qualification examination of lenders is becoming more and more relaxed, which leads to many people who have no repayment ability to get housing loans. For them, due to the continuous development of the real estate market, newly bought houses can earn profits according to the price difference and repay loans, which leads to a huge bubble crisis in the real estate market. However, with the shrinking of real estate business, the house you bought can't be sold at all, so you can't get a loan. Fannie Mae and Freddie Mac, as credit guarantee institutions, need to pay compensation to investors constantly and eventually go bankrupt.
other
1. Although Fannie Mae and Freddie Mac are private organizations, they are supported by the federal government. Their primary purpose is to promote the development of the real estate market and loan business, so that everyone has a house to live in, and their secondary purpose is to make some money.
2. The investors behind it are mainly pension funds, taxpayers and other investors, including China who invested in Fannie Mae and Freddie Mac. There are many political factors involved, which make the federal government responsible for Fannie Mae and Freddie Mac. They have reached the point where they are too big to fail.
3. The development of Fannie and Freddie enterprises actually has advantages and disadvantages. On the one hand, it is true that people enjoy welfare and everyone has a big house, but on the other hand, the emergence of the real estate bubble is predictable, and the snowball is getting bigger and bigger.