What is GSE?

1938 Fannie Mae was established for the above reasons. In 1970s, Freddie Mac was established to help the American economy recover from the oil crisis 1974. However, today's Fannie Mae and Freddie Mac have high leverage ratio, disproportionate investment and serious capital shortage. Fannie Mae and Freddie Mac are government-supported enterprises; There are several ways to stimulate real estate in the past: 1. Buyers can borrow money from banks when buying real estate. Banks sell lenders' loans to Fannie Mae and Freddie Mac for cash and then borrow them. Then, the above loan portfolio is guaranteed by Fannie Mae and Freddie Mac and sold in the market as mortgage-backed securities. If the mortgage payer doesn't pay back the money, Fannie Mae and Freddie Mac will pay back the money on their behalf, and they will earn a spread from it.