Consider for a moment Freddie Mac and Fannie Mae. These are the two institutions in America that have been chartered by the American Government to purchase mortgages. Investment in these corporations has previously been thought to be secure. Almost as secure as purchasing bonds. And it should be. These are people’s homes that we are talking about here. These houses are where families are raised. These homes raise the children that will continue to carry the American flag and work in our factories and run our business and farm our lands and teach their children and write books and build new technology. Consider for a moment the mission statement on Freddie Mac’s website:
Freddie Mac’s mission is to provide liquidity, stability and affordability to the housing market.
Congress defined this mission in our 1970 charter [PDF 54K], which lays the foundation of our business and the ideals that power our goals.
Our mission forms the framework for our business lines, shapes the products we bring to market and drives the services we provide to the nation’s housing and mortgage industry. Everything we do comes back to making America’s mortgage markets liquid and stable and increasing opportunities for homeownership and affordable rental housing across the nation.
Our mission strives to create:
- Stability: Freddie Mac’s retained portfolio plays an important role in making sure there’s a stable supply of money for lenders to make the home loans new homebuyers need and an available supply of workforce housing in our communities.
- Affordability: Financing housing for low- and moderate-income families has been a key part of Freddie Mac’s business since we opened our doors. Freddie Mac’s vision is that families must be able both to afford to purchase a home and to keep that home.
Fannie Mae provides stability, liquidity, and affordability to the nation’s housing finance system under all economic conditions. We are a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market.Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. Our job is to help those who house America.
Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America.
The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world.
Fannie Mae has a unique duty to the public it serves — and the private investors that fuel its service — to be a model company focused on service, reliability, and value.
Like all who participate in the housing market, Fannie Mae has a responsibility to help home buyers, homeowners, and communities through market challenges. We believe in the long term health of America’s housing market. The nation is growing and that growth will bring a renewed demand for housing and for responsible, sustainable mortgage lending. Fannie Mae will be there to help meet America’s changing housing needs.
Fannie and Freddie for all their warts, are providing a huge share of the overall liquidity in the housing market at this point in time.
Everyone with a passing interest in a stable housing market in America should be buying stock in these two essential pieces of our economy. Not because it is a shrewd stock investment but because we will not be luving life if they fail. Think of it as buying insurance against a likely disaster.
We will not be loving life if the government has to take them over either. Our legislators continue to demonstrate their lack of understanding of the secondary mortgage market as they suggest ways to “fix” the subprime mess.
If you don’t believe me, ask your favorite loan officer about life without Fannie and Freddie. I love the free market system but every once in a while the free market needs a little assistance from a benevolent outside source. In this particular case I believe it needs to be us!