As I described at length last year, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (hereafter Fannie and Freddie) have contributed importantly to the development of the secondary home mortgage market and thereby to the diversification of funding sources for depository institutions and other mortgage originators.
In particular, Fannie and Freddie played a critical role in promoting mortgage securitization - the key to the success of secondary mortgage markets in the United States.1 The stated intent of the Congress is to use the housing-related GSEs to provide a well-established channel between housing credit and the capital markets and, through this channel, to promote homeownership, particularly among lower-income families.