GSE Comparison Guide — Updated 2026
Fannie Mae vs Freddie Mac
Everything You Need to Know
Fannie Mae and Freddie Mac are the two largest government-sponsored enterprises in the United States. Together they guarantee roughly half of all American mortgages. They have been in government conservatorship since 2008. I have been invested in both since 2013 and have written over 300 articles about them. This page explains what they are, how they differ, and why they matter.
Side-by-Side Comparison
A quick reference comparing Fannie Mae and Freddie Mac across key dimensions.
What Is Fannie Mae?
The Federal National Mortgage Association, commonly known as Fannie Mae, was created in 1938 during the Great Depression as part of President Franklin D. Roosevelt’s New Deal. Its original purpose was to provide a secondary market for mortgages, giving banks the liquidity to make more home loans and expand homeownership across America.
Fannie Mae began as a government agency within the Federal Housing Administration. In 1968, President Lyndon Johnson privatized Fannie Mae, converting it into a shareholder-owned corporation that was listed on the New York Stock Exchange. This made Fannie Mae a unique hybrid: a private company with a congressional charter and a public mission.
Fannie Mae is headquartered in Washington, D.C. Before the conservatorship, it was one of the largest companies in America by assets, employing thousands of people and guaranteeing trillions of dollars in mortgages. It traditionally worked with the largest commercial banks in the country — JPMorgan Chase, Bank of America, Wells Fargo — to purchase and securitize their mortgage loans.
Today, Fannie Mae has approximately $4.3 trillion in total assets and guarantees roughly 30% of all outstanding U.S. mortgages. Its common stock trades on the OTC market under the ticker FNMA, and it has approximately 20 series of junior preferred stock.
What Is Freddie Mac?
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, was created by Congress in 1970 through the Emergency Home Finance Act. Unlike Fannie Mae, which started as a government agency, Freddie Mac was established as a private corporation from the beginning.
Freddie Mac was created specifically to end Fannie Mae’s monopoly on the secondary mortgage market and to provide competition. While Fannie Mae served the large commercial banks, Freddie Mac was designed to serve the savings and loan industry (thrifts), community banks, and credit unions — smaller lenders that had been underserved in the secondary mortgage market.
Freddie Mac is headquartered in McLean, Virginia, just outside of Washington, D.C. It went public on the New York Stock Exchange in 1989. While smaller than Fannie Mae, Freddie Mac grew to become one of the largest financial institutions in the world, with a mortgage guarantee portfolio in the trillions of dollars.
Today, Freddie Mac has approximately $3.2 trillion in total assets and guarantees roughly 20% of all outstanding U.S. mortgages. Its common stock trades on the OTC market under the ticker FMCC, and it has approximately 30 series of junior preferred stock. Freddie Mac’s securities were historically called Participation Certificates (PCs), though both GSEs now issue Uniform Mortgage-Backed Securities (UMBS).
Key Differences Between Fannie Mae and Freddie Mac
Despite their similar missions, Fannie Mae and Freddie Mac have distinct histories, structures, and characteristics.
Origin and History
Fannie Mae was created in 1938 as part of FDR's New Deal to expand homeownership during the Great Depression. It was a government agency for its first 30 years before being privatized in 1968. Freddie Mac was created in 1970 specifically to compete with Fannie Mae and break its monopoly on the secondary mortgage market. Freddie Mac was always a private company from the start, though it was created by an act of Congress.
Loan Sources and Customers
Fannie Mae traditionally purchases loans from large, nationally chartered commercial banks like JPMorgan Chase, Bank of America, and Wells Fargo. Freddie Mac was designed to serve smaller lenders: savings and loans (thrifts), community banks, and credit unions. In practice, this distinction has blurred significantly over the decades, and both companies now buy from a wide range of lenders.
Securities Naming
Both companies securitize mortgages into bonds that are sold to investors, but they use different names. Fannie Mae issues Mortgage-Backed Securities (MBS). Freddie Mac historically issued Participation Certificates (PCs), though it now also uses the Uniform MBS (UMBS) under a joint securitization platform with Fannie Mae. The UMBS initiative was designed to make the two companies' securities more interchangeable.
Size and Market Share
Fannie Mae is the larger of the two by most measures. Fannie Mae has roughly $4.3 trillion in total assets compared to Freddie Mac's $3.2 trillion. Fannie Mae typically guarantees about 30% of outstanding U.S. mortgages, while Freddie Mac guarantees about 20%. Together, they back roughly half of all American home mortgages.
Preferred Stock
Both companies issued preferred stock before the conservatorship. Fannie Mae has approximately 20 series of junior preferred shares, while Freddie Mac has approximately 30 series. Key tickers include FNMAS (Fannie Mae Series S, $25 par, 8.25% coupon) and FMCKJ (Freddie Mac Series Z, $50 par, 5.81% coupon). All junior preferred dividends have been suspended since 2008.
Corporate Culture
Fannie Mae was historically known as the more politically connected of the two, with deep ties to Washington and a reputation for lobbying. Freddie Mac, headquartered in suburban Virginia rather than D.C., was seen as more of a traditional financial services company. Both have been under FHFA conservatorship since 2008, so these cultural differences are less relevant today.
Key Similarities
For investors, the similarities between Fannie Mae and Freddie Mac are at least as important as the differences. These two companies share the same fundamental investment thesis.
Government-Sponsored Enterprise (GSE) Status
Both Fannie Mae and Freddie Mac are government-sponsored enterprises, created by acts of Congress to serve a public mission. They are not government agencies, but they operate under federal charters with an implied (but not explicit) government guarantee. This unique status gives them access to cheaper funding than private companies.
Conservatorship Since 2008
Both companies were placed into conservatorship by the Federal Housing Finance Agency (FHFA) on September 6, 2008, at the height of the financial crisis. FHFA controls their operations, and both entered into Senior Preferred Stock Purchase Agreements (PSPAs) with the U.S. Treasury. They have been in conservatorship for over 17 years.
Mortgage Guarantee Mission
Both companies serve the same fundamental function: they buy mortgages from lenders, package them into mortgage-backed securities, and guarantee them against default. This provides liquidity to the mortgage market, allowing lenders to make more loans. Together, they guarantee roughly $7.5 trillion in mortgage debt.
Net Worth Sweep
Both companies are subject to the Third Amendment Net Worth Sweep, implemented in August 2012. Under the sweep, nearly all of their quarterly profits are sent to the U.S. Treasury. Both companies have sent hundreds of billions of dollars to Treasury since the sweep began, far exceeding the bailout funds they received.
Preferred Stock Structure
Both companies issued junior preferred stock before the conservatorship, and both have had their preferred dividends suspended since 2008. The preferred shares of both companies trade on the OTC market at deep discounts to par value. The investment thesis for both is essentially the same: if conservatorship ends and shareholders are treated fairly, these shares could return to par.
Profitability
Both companies have been enormously profitable since 2012. Each generates billions of dollars in net income annually. The financial crisis losses have been more than repaid to Treasury through the Net Worth Sweep. Both companies are financially healthy and well-capitalized by any reasonable measure.
The Conservatorship: A Timeline
Both Fannie Mae and Freddie Mac were placed into conservatorship on the same day. Understanding the conservatorship is essential to understanding every GSE investment. Here is how it unfolded.
The Financial Crisis
As the housing bubble burst, both Fannie Mae and Freddie Mac faced massive losses on their mortgage portfolios. Their stock prices collapsed. The federal government determined that their failure could bring down the entire financial system.
Conservatorship Begins
FHFA Director James Lockhart placed both companies into conservatorship on September 6, 2008. Treasury Secretary Hank Paulson negotiated the Senior Preferred Stock Purchase Agreements (PSPAs), providing up to $100 billion each in exchange for senior preferred stock with a 10% dividend and warrants for 79.9% of common stock.
Draws and Dividends
Both companies drew capital from Treasury to cover losses. Fannie Mae drew approximately $116 billion and Freddie Mac drew approximately $71 billion. They paid a 10% annual dividend on the outstanding draws, creating a circular arrangement where they sometimes borrowed from Treasury to pay the dividend back to Treasury.
The Third Amendment (Net Worth Sweep)
Treasury and FHFA agreed to the Third Amendment, replacing the 10% fixed dividend with a sweep of nearly all quarterly profits. This was implemented just as both companies were returning to massive profitability. Shareholders allege this was done deliberately to prevent the companies from ever repaying their draws and exiting conservatorship.
Profits Swept to Treasury
Both companies became enormously profitable. By 2023, they had sent more than $300 billion combined to Treasury under the Net Worth Sweep, far exceeding the approximately $190 billion they originally drew. Despite being profitable, they were kept in conservatorship with minimal retained capital.
Capital Reserve Amendments
Under Treasury Secretary Mnuchin, the PSPAs were modified to allow each company to retain a small amount of capital ($25 billion for Fannie, $20 billion for Freddie). This was seen as a first step toward recapitalization but fell far short of the hundreds of billions needed to exit conservatorship.
Privatization Momentum
Political support for ending the conservatorship has grown. FHFA has been working on recapitalization frameworks. The key questions remain: how much capital is needed, what happens to Treasury's senior preferred stock, and how will existing shareholders (common and preferred) be treated. The answers to these questions will determine the value of every GSE share.
Why I Invest in Both
I hold junior preferred stock in both Fannie Mae and Freddie Mac. I have been in this trade since 2013 and have documented every step of the journey across more than 300 articles on SeekingAlpha and 8 books. This is the trade that defines my investing career.
My thesis is simple: both companies are profitable, essential to the American housing market, and their junior preferred shares trade at deep discounts to par value. If the conservatorship ends with any recapitalization plan that respects the existing capital structure, these shares are worth multiples of their current price. The par value of these shares is $25 or $50 per share, with dividend coupons that would be reinstated upon exit from conservatorship.
I invest in both companies because the outcome for one is inextricably linked to the other. Any recapitalization plan will almost certainly apply to both Fannie Mae and Freddie Mac simultaneously. The Net Worth Sweep applies to both. The FHFA oversees both. The political dynamics affect both. If the thesis is right, it is right for both companies.
The full story of the conservatorship, the Net Worth Sweep, and the government’s treatment of shareholders is documented on my Fanniegate page. To see exactly what I hold, visit my positions page. To learn how to buy these shares yourself, read my investing guide.
Frequently Asked Questions
Common questions about Fannie Mae, Freddie Mac, and the conservatorship.
Is Fannie Mae a government agency?
No. Fannie Mae is a government-sponsored enterprise (GSE), not a government agency. It was created by Congress and operates under a federal charter, but it is a private, shareholder-owned company. It was listed on the New York Stock Exchange before the conservatorship. The distinction matters because, as a private company, its shareholders have rights that the government cannot simply ignore, which is at the heart of the legal battles over the Net Worth Sweep.
Is Freddie Mac a government agency?
No. Like Fannie Mae, Freddie Mac is a government-sponsored enterprise, not a government agency. It was created by Congress in 1970 as the Federal Home Loan Mortgage Corporation. It has always been a private, shareholder-owned company. Both Fannie and Freddie have an implied government guarantee on their debt, but they are not part of the federal government.
Can you buy Fannie Mae or Freddie Mac stock?
Yes. Both companies' common and preferred shares trade on the OTC (over-the-counter) market. Common stock trades under FNMA (Fannie Mae) and FMCC (Freddie Mac). Preferred shares trade under various tickers like FNMAS, FMCKJ, FMCCS, and FMCCJ. You need a brokerage account that supports OTC trading. Interactive Brokers, Fidelity, and Charles Schwab all support OTC stocks. Robinhood does not support most OTC stocks.
What is the Net Worth Sweep?
The Net Worth Sweep is the informal name for the Third Amendment to the Senior Preferred Stock Purchase Agreements, implemented in August 2012. It replaced a fixed 10% dividend with a variable dividend equal to nearly all of each company's quarterly net income. Under the sweep, both companies have sent over $300 billion to the U.S. Treasury, far exceeding the $190 billion in bailout funds they received. Shareholders view it as a government taking of private property.
Will Fannie Mae and Freddie Mac be privatized?
That is the central question for GSE investors. Multiple administrations have discussed ending the conservatorship. FHFA has been working on recapitalization plans. The political momentum for privatization has grown significantly. However, the timeline and exact structure remain uncertain. The outcome will determine whether preferred shares return to par value or face further dilution.
What happens to shareholders if they exit conservatorship?
It depends on the recapitalization plan. If the government respects the existing capital structure, preferred shares could return to par value ($25 or $50 per share) and resume dividend payments. Common shareholders could see significant gains as well, though Treasury's 79.9% warrants represent substantial dilution risk. Some proposals have suggested converting Treasury's senior preferred to common, which would dilute existing common shareholders but preserve preferred shareholders' par claims.
Why are Fannie Mae and Freddie Mac still in conservatorship?
The conservatorship has lasted over 17 years for several reasons. First, the Net Worth Sweep prevented both companies from building capital. Second, there was no political will to address the issue, as Treasury benefited from the ongoing profit sweep. Third, restructuring the $7.5 trillion mortgage market carries enormous risk and political complexity. Fourth, various stakeholder groups (taxpayers, homeowners, lenders, investors) have competing interests that make reform difficult.
What is the difference between common and preferred stock in Fannie Mae and Freddie Mac?
Common stock (FNMA, FMCC) represents ownership of the companies with unlimited upside potential but also more risk, especially due to Treasury's 79.9% warrants. Preferred stock has a fixed par value (typically $25 or $50), a stated dividend coupon, and priority over common in any restructuring or liquidation. Most serious GSE investors focus on the preferred shares because of their defined par value and structural seniority.
Do Fannie Mae and Freddie Mac do the same thing?
Essentially, yes. Both companies buy mortgages from lenders, package them into mortgage-backed securities, and guarantee them against default. The main historical difference is their customer base: Fannie Mae traditionally served large banks while Freddie Mac served smaller lenders and thrifts. Today, both serve a broad range of mortgage originators. They also use slightly different underwriting systems (Fannie's Desktop Underwriter vs Freddie's Loan Prospector) and have different specific loan programs.
How much money did Fannie Mae and Freddie Mac get in the bailout?
Fannie Mae drew approximately $116 billion and Freddie Mac drew approximately $71 billion from Treasury, for a combined total of roughly $190 billion. However, under the Net Worth Sweep, both companies have returned over $300 billion to Treasury, far exceeding what they received. Critics of the sweep argue that the companies have more than repaid the bailout and that continued sweeping of profits is government overreach.
Get Glen's Musings
Occasional thoughts on AI, Claude, investing, and building things. Free. No spam.
Unsubscribe anytime. I respect your inbox more than Congress respects property rights.
Important Disclaimer
This page is for educational and informational purposes only. It is not financial advice, investment advice, or a recommendation to buy or sell any security. Glen Bradford holds positions in Fannie Mae and Freddie Mac junior preferred stock and has a direct financial interest in the outcome of the conservatorship. Investing in GSE securities carries significant risk, including the possibility of total loss. The information on this page may contain errors or become outdated. Always do your own research and consult a qualified financial advisor before making any investment decisions.
Keep Exploring
Fanniegate
The full story of the largest government seizure of private property in American history. 300+ articles, 8 books.
Read moreMy Positions
Where I put my money. Full transparency on every GSE preferred holding.
Read moreHow to Invest in Fannie Mae
Step-by-step guide to buying FNMA, FNMAS, FMCKJ, and other GSE shares.
Read moreGSE Preferred Stock Deep Dive
FNMAS, FMCKJ, FMCCS, FMCCJ explained. Par values, coupons, and what they could be worth.
Read more