Answer: Fannie Mae (FNMA) and
Freddie Mac (FHLMC) are stockholder-owned corporations chartered by Congress. They are mortgage investors created by the government
to support the secondary market in mortgages on residential properties with mortgage purchase and securitization programs.
By purchasing mortgages, these entities provide lenders with the funds needed to make additional loans. They write the guidelines
that underwriters use for loans that are intended to be purchased by them. When you hear or read that rates dropped or rates
are up, the media is usually reporting on FNMA and FHLMC rates. These are typically the best rates available, but
some borrowers cannot meet their guidelines and are forced into alternative lending or sub-prime solutions. Unfortunately even though they may qualify for FMNA/FHLMC loans, many naive borrowers
end up with alternative lending or sub-prime loans
because they don't understand the difference and/or the lender they chose does not have access to the better loans. When it's
this much money, it pays to understand.
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