Fannie and Freddie at a glance
What are Fannie Mae and Freddie Mac?
They are government-controlled finance companies that together own or guarantee nearly 31 million mortgages worth about $5 trillion — about half of all U.S. home loans. Fannie Mae is the common name for the Federal National Mortgage Assn., based in Washington. Freddie Mac is the common name for the Federal Home Loan Mortgage Corp., based in McLean, Va.
How do they work?
Fannie Mae and Freddie Mac buy mortgages from banks, savings and loans and other mortgage lenders. They package some of those home loans into mortgage-backed securities, which then are sold as guaranteed investments.
Who owns Fannie Mae and Freddie Mac?
American taxpayers, mostly. The U.S. government took a 79.9% stake in the two private companies in September 2008 after they suffered huge loan losses. The remaining shares are now sold on the over-the-counter market.
How did the companies get in trouble?
As home prices collapsed, so did the value of the mortgages the companies held, lowering their already small cushions of capital. As more of the loans they had backed went bad, they were no longer able to raise money from private sources.
How much have taxpayers paid to keep the companies afloat?
As of June 30, $144.9 billion, but the companies recently have requested an additional $3.3 billion.