Fannie Mae, Freddie Mac, and Housing: Good Intentions Gone Awry

Abstract

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are the two dominant entities in the secondary market for residential mortgages in the United States. This chapter describes and discusses these two companies and their special status in the U.S. residential mortgage market and recommends their true privatization, as well as a set of additional reform measures that would improve the efficiency of housing construction and consumption in the U.S. economy. Along the way, we will address a number of major issues that concern housing and its special place in the political landscape of America.