Any discussion of the different types of mortgage lenders however must first start with a discussion of Fannie Mae (FNMA) and Freddie Mac (FHLMC). Fannie Mae was created as a federal agency by the U.S. Congress in 1938 to ensure adequate liquidity in the mortgage market regardless of economic conditions. Freddie Mac was created in 1970 to help expand the secondary market. Both agencies are still overseen by the government and provide the lion’s share of liquidity in the US mortgage market today. They also set the standards and qualifying guidelines by which most of the conventional mortgage market operates today. Ultimately, around two-thirds of all conventional mortgages in the US are owned by Fannie and Freddie.
To break this down a bit further, after your closing your loan is essentially split into 2 parts. There is the fixed income security instrument (the promissory note) and the servicing rights. Just because your loan servicing may be handled by a bank or servicing company, the odds are the “Note” is held by Fannie or Freddie.