Saturday, October 4, 2008

What's up with the names Fannie Mae, Freddie Mac, and Sallie Mae?

So on a lighter note, have you ever wondered what's up with the names Fannie Mae, Freddie Mac, and Sallie Mae? I looked around and found the answer in a posting by Cynthia E. Brodrick on bankrate.com.

Perhaps like me, you're wondering what's up with these country-cousin-style names. A little explanation is in order. Their given names are the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). You can think of Fannie and Freddie as their easier-to-remember "code names."

Now I can see Fannie Mae coming out of FNMA, but Freddie Mac is a heck of a stretch out of FHLMC. I mean, where'd the H and L go? Freddie's Fitzpatrick explained that while the "MA" turned into Mae, the "MC" made more sense as Mac. Therefore the FHLMC needed a more masculine name to go with Mac. Still no explanation on the missing H and L.

If you borrowed money for college, you may have met Freddie and Fannie's young cousin, Sallie Mae. Also known as the Student Loan Marketing Association (SLMA), Sallie is the company that buys up education loans. Sallie Mae is different from Freddie and Fannie in that she also administers those loans, meaning hundreds of thousands of college grads write out their checks to Miss Sallie.

By the way, they all have another cousin named Ginnie Mae. She's a true government agent, managing the government's secondary mortgage market. Her name stands for Government National Mortgage Association (GNMA), and her job is to serve lower-income homebuyers. Through Ginnie Mae, the federal government assumes the risk on mortgages that the FHA insures and the VA guarantees.

These simplified names, Freddie and Fannie, are explained in a government "cover story" that claims they're just easier to remember. But personally, I think these organizations "cutesified" their names in hopes that it would make loan holders less intimidated by these financial institutions that own their mortgages.

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