Which organization is the government-sponsored enterprise created to support the secondary mortgage market?

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Study for the Burk Baker National Test. Use flashcards and multiple choice questions with hints and explanations to prepare effectively. Get ready for your exam!

Multiple Choice

Which organization is the government-sponsored enterprise created to support the secondary mortgage market?

Explanation:
Freddie Mac is the government-sponsored enterprise created to support the secondary mortgage market. It was established to increase liquidity by buying mortgages from lenders and packaging them into mortgage-backed securities that investors can purchase. This process frees up capital for lenders to issue more loans, fueling the flow of funds in the housing market. Maggie Mae isn’t a real organization, and Ginnie Mae is a government agency (not a GSE) that guarantees MBS, while Fannie Mae is another GSE with the same purpose—Freddie Mac is the example listed here that fits this role.

Freddie Mac is the government-sponsored enterprise created to support the secondary mortgage market. It was established to increase liquidity by buying mortgages from lenders and packaging them into mortgage-backed securities that investors can purchase. This process frees up capital for lenders to issue more loans, fueling the flow of funds in the housing market. Maggie Mae isn’t a real organization, and Ginnie Mae is a government agency (not a GSE) that guarantees MBS, while Fannie Mae is another GSE with the same purpose—Freddie Mac is the example listed here that fits this role.

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