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Government Sponsored Enterprises (GSEs)

Fannie Mae and Freddie Mac play a key role in the secondary mortgage market, which is crucial in providing capital for mortgage lending. Without the GSEs and FHA-insured loans, that currently constitutes a large portion of the market space, there would be almost no capital available for mortgage lending. This would severely restrict, if not curtail, home sales and any supporting ancillary home sales services.

On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) into conservatorship. FHFA explained it took this action “to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their [housing] mission, and mitigate the systemic risk that has contributed directly to the instability in the current market.”

Over the last several years, Congress has focused its conversation on how the GSEs found themselves in their current predicament. In the 113th Congress, two significant pieces of legislation were introduced in the House and Senate – “The Protecting American Taxpayers and Homeowners (PATH) Act” (H.R 2767) and “The Housing Finance Reform and American Protection Act” (S. 1217).

No comprehensive housing finance reform is expected to be signed into law during the 114th Congress.

For more, read NAR's Issue Summary on GSEs.