Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac

The Congress of the United States granted a charter to both Fannie Mae and Freddie Mac. Both are private companies with the rights, privileges and responsibility of providing an uninterrupted supply of money to mortgage lenders and borrowers.

In order to keep the money supply flowing, Fannie Mae and Freddie Mac buy up mortgages from lenders all across the country and bundle them up into groups called mortgage backed securities. The money earned from the sale of the securities is used to purchase more mortgages and so the cycle goes on.

The majority of the mortgages purchased by Fannie Mae and Freddie Mac are called conventional mortgages. A conventional mortgage has no government insurance or government guarantee like FHA, VA and USDA or RHS mortgages.

If a lender has to foreclose on a property that is mortgaged with a conventional mortgage, then that property will be handled by Fannie Mae or Freddie Mac – not FHA, VA or USDA.

How does this effect you? You will be doing property preservation work under the guidelines set down by Fannie Mae and Freddie Mac.

Fannie Mae has published “Property Preservation Matrix” which is their Property Maintenance and Management Reference Guide. It has their fee schedule too!