What is the difference between the various US housing agencies referred to as Freddie Mac, Fannie Mae, and Ginnie Mae?

How were each of them affected by the sub-prime mortgage crisis (or, maybe the better question would be, 'how did they contribute to the crisis')?

  • 1
    Perhaps a better question is how did they participate in the sub-prime mortgage crisis, since they subsidized many of the sub-prime loans.
    – C. Ross
    Commented Apr 27, 2010 at 14:08

1 Answer 1


Freddie Mac and Fannie Mae both do essentially the same thing: they repackage mortgages into investments (aka mortgage-backed securities) and sell those securities to investors. If a mortgage borrower defaults, it affects the value of the securities.

Ginnie Mae performs the same function as Freddie and Fannie, except they only deal with government-insured mortgages, such as those backed by the Federal Housing Administration (FHA). Example: If a FHA mortgage borrower defaults, FHA and Ginnie Mae continue to make payments to those who invested in Ginnie Mae securities.

Due to the subprime crisis, Freddie Mac and Fannie Mae's securities lost a lot of value. Those who invested in Freddie/Fannie bonds lost money. Both corporations had to be taken over by the government and placed in a conservatorship.

Ginnie Mae's securities, on the other hand, remained relatively stable due to the government guarantee on them. Investors in Ginnie Mae bonds did not lose money. However, if any Ginnie Mae mortgage borrowers default, the extra payments the government has to make to investors in order to compensate comes out of tax dollars, thus everyone is affected in a way.


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