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The Maes & Macs: Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae

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Freddie Mac Fannie Mae Valcano CartoonWith the recent news of Freddie Mac and Fannie Mae being delisted from the NYSE and relegated to the OTC market, I thought it would be interesting to take a look at the four entities that share similar names. Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae sound very similar and while each started as a government sponsored entity (GSE), they’ve taken very different and distinct paths since their creations.

They’re often mistaken for each other and before I researched this, I didn’t know the difference between Freddie Mac and Fannie Mae (does it matter? they both seem f’d). I also didn’t know what Ginnie Mae did, other than being the only one that was explicitly backed by the US government (until recently, Freddie and Fannie were implicitly backed by the USG), and only that Sallie Mae dealt with student loans.

Let’s see what these guys do!

First, here are their full official names:

  • Freddie Mac is the nickname of the Federal Home Mortgage Loan Corporation (FHLMC).
  • Fannie Mae is the nickname of the Federal National Mortgage Association (FNMA). It was chartered by the FHA Administrator on February 10th, 1938 and it’s original purpose was to purchase, hold, or sell FHA-insured mortgage loans originated by private lenders. After WW2, it was expanded to include VA-guaranteed mortgages.
  • Ginnie Mae is the nickname of the Government National Mortgage Association (GNMA).
  • Sallie Mae is the nickname of the Student Loan Marketing Association (SLMA).

How They Fit Together

Knowing how they fit together will explain why each looks the way they do now. Fannie Mae is the oldest of the four organizations and was chartered in 1934 to purchase, hold, and sell FHA insured mortgages. After WW2, this expanded to include VA-backed mortgages. In 1954, explicitly federal backing was removed from secondary market operations and the organization began selling stock to pay back Treasury-held preferred stock. In 1968, Fannie Mae was split in two – Ginnie Mae, for guaranteeing payment of principal and interest on mortgage backed securities backed by the federally insured and guaranteed loans (FHA, VA, etc.), and a reconstituted Fannie Mae became a government sponsored entity responsible for the secondary market operations. At this point, Fannie Mae was public and shareholder owned, trading under the ticker FNM.

Ginnie Mae does not issue mortgage backed securities but guarantees them and Ginnie Mae has the explicit guarantee of the US government (“full faith and credit”). A couple years later, in 1970, Freddie Mac was formed and would conduct secondary market operations for conventional mortgages. Freddie Mac exists also as a GSE and is publicly traded under the ticker FRE.

Sallie Mae, on the other hand, doesn’t fit anywhere in that storyline because they deal with student loans. Formed in 1972 as a GSE, they began privatizing in 1997 and were fully severed from the federal government at the end of 2004. Today Sallie Mae is publicly traded under the ticker SLM.They originate federally insured loans under the Federal Family Education Loan Program (FFELP), a familiar acronym for anyone who has applied for a student loan.

Got it? :)

(Photo: wstera2)

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3 Responses to “The Maes & Macs: Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae”

  1. eric says:

    Wow no comments? I thought this was really interesting since I had no idea how these four entities were interrelated. You hear the names toss around so often so thanks for the history lesson!

  2. Alda Hahner says:

    I seriously desired to record a thing so that you can appreciation for a few of the striking data you happen to be submitting at this site. My extented world-wide-web research provides after your day already been regarded by using excellent truth and methods to interchange along with our guests. I’d let you know that almost everyone guests are really definitely lucky to stay in a good web site with many different exclusive those that have helpful basics. I believe somewhat privileged to own discover the web pages and appearance forward to seriously much more outstanding min’s examining in this article. Appreciate it again for those points.

  3. S.Quade says:

    The Sallie taxpayer-funded-bailout (’cause it’s way broke)is in the Obama care bill. Kids borrowed way more than they’ll pay back. Obama said recently that the kids will pay less than 10% of their annual income (could be less than$1,000 per year) for 20 years, (could be around $20K on a $350K debt) and they’ll be off the hook — no more payments, but SOMEONE’S going to pay and it’ll be anyone who’s working and trying to support themselves and their family.

    Anyone reading this who’s under the age of 65 will be paying and paying and paying for all of whatever the bankster criminals ask the government (president and congress) to give them, though they reap profits that kings only dream of.

    Insist on gold and silver money, default of the US debt, and no more handouts.


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