What is the common purpose of Fannie Mae, Ginnie Mae, and Freddie Mac?

Fannie Mae, Ginnie Mae, and Freddie Mac play a critical role in the U.S. housing finance system by providing liquidity and stability to the mortgage market. These government-sponsored enterprises (GSEs) are primarily focused on purchasing existing mortgage loans from lenders. This process allows banks and other financial institutions to replenish their capital by selling off the loans, enabling them to make more home loans to consumers.

By purchasing existing mortgages, these entities help to maintain a steady flow of funds in the housing market, which can lower interest rates and make homeownership more accessible. They also ensure that there is a continuous supply of funds for lenders, which contributes to the overall stability of the mortgage market. This function enhances the ability of borrowers to obtain mortgages and keeps the housing market running smoothly, especially during times of economic uncertainty.

The other options refer to functions that are not the primary roles of these organizations—home insurance and issuing new loans are outside their operational scope, and while they may influence interest rates indirectly through their activities, they do not have a regulatory role in setting those rates.