The roles of Fannie Mae and Freddie Mac have become increasingly controversial in the modern world of residential mortgage finance. The authors describe the special features of these two companies and their roles in the mortgage markets and then discuss the controversies that surround the companies and offer recommendations for improvements in public policy.
JEL classification: G21, G28
Key words: Fannie Mae, Freddie Mac, government-sponsored enterprises, residential mortgages, securitization, regulation
The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility. From 1986 to 1989, White was a board member of the Federal Home Loan Bank Board, with responsibilities that included being a board member of Freddie Mac. The authors thank the following for helpful comments: Mark Flannery, Michael Fratantoni, Edward Golding, Richard Green, James Hines, Dwight Jaffee, Wayne Passmore, Alex Pollock, Andrei Shleifer, Robin Seiler, Timothy Taylor, and Larry Wall.
Please address questions regarding content to W. Scott Frame, Financial Economist and Associate Policy Advisor, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, NE, Atlanta, Georgia 30309-4470, firstname.lastname@example.org, 404-498-8783, 404-498-8956 (fax), or Lawrence J. White, the Arthur E. Imperatore Professor of Economics, Stern School of Business, New York University, New York, email@example.com.
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