Fannie Mae and Freddie Mac
Fannie Mae was established in 1938 as a mechanism to make
mortgages more available to low-income families. It was added
to the Federal Home Mortgage association, a government agency
in the wake of the Great Depression in 1938, as part of
Franklin Delano Roosevelt`s New Deal in order to facilitate
liquidity within the mortgage market. In 1968, the government
converted Fannie Mae into a private shareholder-owned
corporation in order to remove its activity from the annual
balance sheet of the federal budget.
Fannie Mae and Freddie Mac (Federal Home Loan
Mortgage Corporation) are estimated to have guaranteed
about $6 trillion or 50% of the U.S.`s $12 trillion
in mortgages.
In 1999, Fannie Mae came under pressure from the Clinton
administrationcitation needed to expand mortgage loans to
low and moderate income borrowers. That was the origin
of so-called `subprime mortgages.`
It is estimated that there was over
$1.3 trillion in subprime mortgages.
On September 7, 2008, James Lockhart, director of the Federal
Housing Finance Agency (FHFA), announced that Fannie Mae and
Freddie Mac were being placed into conservatorship of the FHFA.
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