A Short History of GSE's

The Federal National Mortgage Association or Fannie Mae was a Government Sponsored Enterprise or GSE formed by Franklin Delano Roosevelt’s New Deal in l938 in response to the Great Depression. It attempted to facilitate liquidity in the market by making mortgages available to lower income families. It bought mortgages from Savings and Loans, which encouraged more lending and insured the value of the mortgages by the United States government. In l968 Fannie Mae was converted into a privately owned corporation with shareholders. A newly formed publicly funded partition institution, The Government National Mortgage Association or Ginnie Mae, took over the role of Fannie Mae. In l970 The Emergency Home Finance Act created a new private corporation GSE to further stimulate the secondary housing market. The Federal Home Loan Mortgage Corporation or Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market.