Fannie Mae, Freddie Mac and the crisis in US mortgage finance

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 middleyears 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.