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Finance · Profile from Finance Research Companion

Fannie Mae and Freddie Mac (the GSEs)

Two shareholder-owned companies chartered by Congress that buy mortgages from lenders, guarantee them and sell them to investors as mortgage-backed securities. Together they stand behind roughly half of all US home loans and make the 30-year fixed-rate, prepayable mortgage possible. Fannie Mae was created in 1938 as a New Deal agency and turned private in 1968. Freddie Mac was created in 1970 and listed in 1989. For decades the two earned high returns on thin capital because investors assumed the government would rescue them, an "implicit guarantee" they defended with formidable lobbying. Both had accounting scandals in 2003–04. Both were placed in conservatorship on September 7, 2008, with Treasury committing capital through senior preferred stock and warrants for 79.9% of each. They drew $191.4bn, and from 2013 the 2012 "net worth sweep" sent almost all their profits to Treasury. That produced more than a decade of litigation, including a 2023 jury verdict for shareholders that an appeals court upheld in July 2026. Since 2025 the Trump administration has promoted a public share sale and an eventual exit from conservatorship. As of November 2026 both remain in conservatorship, with net worth of ~$120bn (Fannie) and ~$81bn (Freddie).

At a glance

Founded
Fannie Mae (Federal National Mortgage Association): February 1938, as a government agency under the Reconstruction Finance Corporation; became a privately owned, shareholder-owned company in 1968. Freddie Mac (Federal Home Loan Mortgage Corporation): 1970, under the Emergency Home Finance Act, initially owned by the Federal Home Loan Banks; shares publicly listed after FIRREA (1989)
Founders
Congress and the Roosevelt administration (Fannie Mae); Congress and the Nixon administration (Freddie Mac)
Headquarters
Fannie Mae: Washington, DC. Freddie Mac: McLean, Virginia
Ownership / structure
Government-sponsored enterprises (GSEs) with federal charters. Common and junior preferred shares held by private investors (delisted from the NYSE in 2010; trade over the counter). In conservatorship under the Federal Housing Finance Agency (FHFA) since September 2008. Treasury holds senior preferred stock (Fannie's liquidation preference $238.0bn at September 30, 2026) and warrants for 79.9% of the common stock of each
Leadership (2026)
FHFA director Bill Pulte (since March 2025), also chairman of both boards and, from June 2026, acting director of national intelligence (AP, 2 June 2026); Fannie Mae acting CEO Peter Akwaboah (since October 2025, after Priscilla Almodovar's exit); Freddie Mac CEO Kenny Smith (named late 2025, after Diana Reid's removal in March 2025 and an interim period under Michael Hutchins) (verify current titles)
Segment and clients
Secondary-market guarantors: single-family and multifamily mortgage guarantees, MBS issuance (the Uniform MBS since 2019), a retained portfolio, credit-risk transfer. Clients are lenders (banks, non-banks such as Rocket Companies) and MBS investors
Scale
Owned or guaranteed ~$5tn+ of mortgages in 2008, about half the US market (reported); together guarantee roughly $7tn+ in 2026 (reported, verify)
Profit
2025: Fannie Mae net income $14.4bn (net worth $109.0bn at year-end); Freddie Mac $10.7bn (net worth $70.4bn). Q3 2026: Fannie $4.2bn (net worth $119.6bn); Freddie $3.2bn (net worth ~$81.0bn)
Rescue
Housing and Economic Recovery Act (HERA), July 30, 2008; conservatorship September 7, 2008; Treasury draws $191.4bn in total (Fannie ~$119.8bn, Freddie ~$71.6bn, reported); dividends paid to Treasury ~$300bn+ (reported, verify)
Signature moves (incl. failures)
Fannie's New Deal founding (1938); 1968 privatisation, Freddie's creation and the MBS (1968–89); the 1992 Safety and Soundness Act and housing goals; Freddie's accounting scandal (2003); Fannie's accounting scandal and Raines's exit (2004–06); conservatorship and the PSPAs (2008); the net worth sweep (2012); Collins v. Yellen and the shareholder litigation (2013–26); the release and IPO push (2025–26)

9 strategic moves analysed

Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.

  1. 1938

    Fannie Mae New Deal Founding

    Founding

  2. 1968

    Privatisation Freddie Mac and the MBS

    Spin-off / launch (privatisation of Fannie Mae; creation of Freddie Mac; launch of mortgage-backed securities)

  3. 1992

    Safety and Soundness Act and Housing Goals

    Regulatory change (new regulator, capital standards and affordable-housing mandates)

  4. 2003

    Freddie Mac Accounting Scandal

    Regulatory settlement / failure (accounting manipulation, restatement, management ouster)

  5. 2004

    Fannie Mae Accounting Scandal and Raines Exit

    Regulatory settlement / failure (accounting manipulation, restatement, executive removal)

  6. 2008

    Conservatorship and PSPAs

    Bailout / failure (conservatorship and Treasury capital support)

  7. 2012

    Net Worth Sweep

    Restructuring (Third Amendment to the PSPAs)

  8. 2021

    Collins v Yellen and Shareholder Litigation

    Litigation

  9. 2025

    Release and IPO Push

    IPO (planned) / restructuring

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