Fannie Mae/Freddie Mac

Fannie and Freddie provide liquidity to the housing markets. Plain and simple. On the commercial side, their purpose is to promote affordable housing. Lots of people who don't understand the economy see this as a problem because they really provide capital to assist with the exchange of investment properties, and in theory help to make investors more wealthy, but they target affordable properties and actually help to keep those properties affordable through numerous programs and so on. Fannie purchases loans from their DUS lenders and Freddie gets them originated through their Optigo partners. Dus lenders have warehouse lines to provide the initial funding, and trade the note with investors to lock spread/interest rate. Freddie locks the spread in their quote process and locks the interest rate on its own. Freddie makes money servicing and securitizing I believe, and Im pretty sure Fannie only makes money securitizing. Their securitization models are very different however, and I am not as familiar with that side of the business. That all said, when you read the agencies provided a loan for an apartment, its originated through one of their lenders and ultimately funded by the agencies. The lenders retain the servicing, and typically if they have in house originators, split the loan fee as well. Very profitable model for the lenders and B piece buyers, all in all.