Fannie Mae, Freddie Mac, and Your New Home Loan

By Karen Lawson
Loan Page Columnist

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You've heard of Fannie Mae- and Freddie Mac-approved lenders, and may have seen their unusual names mentioned on the financial pages. But who are they and what role do they play in mortgage lending? Simply put, Fannie Mae and Freddie Mac make funds available to lenders for new home loans.

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Funny Names Funding New Home Loans

Fannie Mae and Freddie Mac, also known as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, buy new home loans from primary lenders such as banks, savings banks, mortgage companies, and online lenders. Once your home loan is closed, your lender may sell your loan to Fannie Mae or Freddie Mac. Your original lender will continue to oversee your loan by collecting payments, and if applicable, overseeing payment of property taxes, hazard insurance, and mortgage insurance premiums.

Best Practices in Mortgage Banking

Fannie Mae and Freddie Mac work with mortgage lenders to ensure best practices in originating and servicing home mortgages. Their policies and guidelines are viewed as standard within the mortgage lending industry.

Fannie Mae and Freddie Mac work with mortgage lenders to streamline the loan approval process. Their automated underwriting programs enable lenders to expedite loan approval and processing. Fannie Mae and Freddie Mac also work closely with government agencies, insurance companies, and communities to assist homeowners affected by natural disasters and economic hardship.

Loan Programs Assist First-Time Homebuyers

Fannie Mae and Freddie Mac programs also assist first-time homebuyers. They work with community agencies, regional redevelopment programs, and the mortgage lending industry to educate homebuyers and make homeownership more accessible.

Sources
Fannie Mae
Freddie Mac

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She earned an MA degree in English from the University of Nevada, Reno.

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