What's the Difference Between Fannie Mae and Freddie Mac Mortgages?

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Whether you’re starting the process of mortgage shopping in your quest for a new home or you’ve watched your fair share of news reports about the economy, you've likely heard of Freddie Mac and Fannie Mae. Their names don’t give away too much, though, so what exactly are these financial entities, why were they created and what’s the difference between them?

While neither Fannie Mae or Freddie Mac directly loan mortgage money to borrowers, they serve an important role in working with banks that do. We'll break down everything you need to know about both of these enterprises and the differences in mortgages that each one of them backs.