Cyclopedia of Congressional Budget Law
Freddie Mac is a private corporation that purchases mortgages and sells mortgage-backed securities to investors, among other financial activities. This corporation is officially known as “Federal National Mortgage Association” but is commonly referred to “Fannie Mae”. It has a specific status, though privately owned, as a “government-sponsored enterprise” or “GSE”.
Freddie Mac was chartered by Congress in 1970 as a private company to likewise help ensure a reliable and affordable supply of mortgage funds throughout the country. Today is a shareholder-owned company that operates under a congressional charter.
Freddie Mac Web Site
Freddie Mac Charter Act
Basic Information for Fannie Mae and Freddie Mac (Federal Housing Finance Agency)
Federal Housing Finance Agency
About Fannie Mae and Freddie Mac
The following is a description of Fannie Mae and Freddie Mac by the FHFA from its website:
FANNIE MAE AND FREDDIE MAC
Fannie Mae and Freddie Mac were created by Congress. They perform an important role in the nation’s housing finance system – to provide liquidity, stability and affordability to the mortgage market. They provide liquidity (ready access to funds on reasonable terms) to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing.
Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending. The Enterprises’ purchases help ensure that individuals and families that buy homes and investors that purchase apartment buildings and other multifamily dwellings have a continuous, stable supply of mortgage money.
By packaging mortgages into MBS and guaranteeing the timely payment of principal and interest on the underlying mortgages, Fannie Mae and Freddie Mac attract to the secondary mortgage market investors who might not otherwise invest in mortgages, thereby expanding the pool of funds available for housing. That makes the secondary mortgage market more liquid and helps lower the interest rates paid by homeowners and other mortgage borrowers.
Fannie Mae and Freddie Mac also can help stabilize mortgage markets and protect housing during extraordinary periods when stress or turmoil in the broader financial system threaten the economy. The Enterprises’ support for mortgage lending that finances affordable housing reduces the cost of such borrowing.
[From the Federal Finance Housing Agency Website: About Fannie Mae and Freddie Mac.]
Definition from 15 U.S.C. 78oo [Class of Equity Securities]:
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(c) Definitions. For purposes of this section, the following definitions shall apply:
(1) Federal Home Loan Bank; member
The terms “Federal Home Loan Bank” and “member”, have the same meanings as in section 1422 of title 12.
(2) Federal National Mortgage Association
The term “Federal National Mortgage Association” means the corporation created by the Federal National Mortgage Association Charter Act [12 U.S.C. 1716 et seq.].
(3) Federal Home Loan Mortgage Corporation
The term “Federal Home Loan Mortgage Corporation” means the corporation created by the Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1451 et seq.].
Links Related to Fannie Mae:
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987
sec. 202. prohibition of counting as savings the transfer of government actions from one year to another.
(a) In General.—Except as otherwise provided in this section, any law or regulation that has the effect of transferring an outlay, receipt, or revenue of the United States from one fiscal year to an adjacent fiscal year shall not be treated as altering the deficit or producing net deficit reduction in any fiscal year for purposes of the Congressional Budget Act of 1974 and the Balanced Budget and Emergency Deficit Control Act of 1985.
(b) Exceptions.—Subsection (a) shall not apply if the law making the transfer stipulates that such transfer—
(1) is a necessary (but secondary) result of a significant policy change;
(2) provides for contingencies; or
(3) achieves savings made possible by changes in program requirements or by greater efficiency of operations.
FTE (Full-Time Equivalent)