What was the original stated purpose of Fannie Mae and Freddie Mac?
A) to allow the government to extend loans directly to low-income and minority households
B) to help provide liquidity in the secondary mortgage markets
C) to operate as non-profit entities that would provide competition for for-profit mortgage companies
D) to take on mortgages going into default in order to prevent them from going into foreclosure

Question

Quizplus · Accepted Answer

The original stated purpose of Fannie Mae and Freddie Mac was to help provide liquidity in the secondary mortgage markets. This means that they were created to encourage lenders to make more loans by purchasing mortgages from them and then selling them as securities to investors. This would allow lenders to free up capital to make new loans, increasing homeownership rates and boosting the economy. It was not their original purpose to extend loans directly to low-income and minority households or to operate as non-profit entities. While they may have taken on mortgages going into default to prevent foreclosures, this was not their primary purpose.

What Was the Original Stated Purpose of Fannie Mae and Freddie