What’s the Difference Between Fannie Mae, Freddie Mac, and Ginnie Mae?

Let’s talk about Fannie Mae, Freddie Mac, and Ginnie Mae.  What are they and what’s the difference between them?

The secondary mortgage market helps provide a constant source of cash to lenders.

First, the similarities – all three of them deal with the secondary mortgage market.  What does that mean?  Well, let’s say you go into the Tiny National Bank and get a loan for $1 million.  This is a tiny bank, so that was all the money that bank had to lend out.  Tiny National Bank takes that I.O.U. you gave them and sells it to an investor on the secondary market.  Now, an investor has the I.O.U. piece of paper, and the bank has another million dollars in cash they can lend out.  This ensures that there is constant flow of cash that the bank can lend out.  That’s an oversimplification, but that’s the gist of it.


So what’s the difference between Fannie Mae, Freddie Mac, and Ginnie Mae?

First off, Fannie Mae and Freddie Mac are private enterprise – they are in the business of making money.  These two entities are heavily regulated by the government, but they are not the government.  Ginnie Mae, on the other hand, is the government.  Ginnie Mae is part of the Department of Housing and Urban Development (HUD).  You can remember that Ginnie and government both start with G.


As I said, Fannie Mae and Freddie Mac are both private enterprise, but they each have their focus.  Fannie Mae sells loans that originate with large commercial banks.  Freddie Mac deals with the smaller savings associations and credit unions.  Both of them deal with conventional mortgages.

Ginnie Mae serves the same function but focuses on government-backed loans, such as FHA and VA.


Why are the names so weird?

The names are derived from initials because there is one thing our government loves and that is initials.  (Even our country is called USA!)  The Federal National Mortgage Association or FNMA became Fannie Mae.  The Federal Home Loan Mortgage Corporation or FHLMC became Freddie Mac.  And the Government National Mortgage Association became Ginnie Mae.


Be sure you know this for the Florida real estate sales associate exam.  I hear people say, “There was a question about Freddie, but not Fannie or Ginnie.”

Then another person say, “I was asked about Fannie, but not Freddie and Ginnie.”

You get the idea – different people get different test versions with different questions.  But the one commonality is that you need to know what these three entities are if you want to do well on the Florida real estate state exam.


Please note that I, Karen Climer, have no affiliation with Climer School of Real Estate.  My father, Ron Climer, sold that school in 2014.  Since that time, I have had no affiliation with that school.  If you are looking for me, you will find me at Demetree School of Real Estate.