The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Fannie Mae, Freddie Mac and the Crisis in US Mortgage Finance

  • Lawrence J. White
Reference work entry


Fannie Mae and Freddie Mac are two large companies – ‘government-sponsored enterprises’ (GSEs) – that are heavily involved in the secondary market for residential mortgages. The GSEs’ expansion into lower quality mortgages, especially during the middle years of the 2000s, was supported by insufficient capital and led to their insolvency and conservatorships on 6 September 2008 – which essentially placed them under full government control. As of the spring of 2011 they remain as mainstays of the US residential mortgage market; but they also remain in conservatorships. Their future and the future of mortgage finance is an active topic of political debate.


Capital Fannie Mae Freddie Mac Government-sponsored enterprises Implicit guarantee Leverage Mortgage-backed securities Mortgage finance Secondary mortgage market 

JEL Classifications

G18 G21 G28 L85 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Lawrence J. White
    • 1
  1. 1.