Government agencies: Fannie Mae and Freddie Mac

The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, play a foundational role in U.S. housing finance. This chapter gives the reader an introduction to the GSEs by reviewing their Charters and Special Status and by surveying research on how the GSEs impact the U.S. mortgage markets. The chapter also summarizes the history of the GSEs, including their fall into conservatorship, as well as the major issues involved in GSE reform efforts. Throughout, the chapter identifies many opportunities for further research, including those related to the political economy of the U.S. housing finance system, the government’s attempt to internalize externalities in housing finance, the potential for racial bias in mortgage lending, the impact of the GSEs on housing supply generally and multifamily housing specifically, the role of fintech at the GSEs, the impact of firms being too big to fail, and the relationship between GSE MBS and the shadow money supply.