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

With the recent news of Freddie Mac and Fannie Mae being delisted from the NYSE [3] 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:

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 [4].

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 [5].

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 [6].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 [7])