Which of the following best describes the role of Fannie Mae and Freddie Mac?

Fannie Mae and Freddie Mac play a crucial role in the secondary mortgage market, which distinguishes them from entities that offer direct mortgages to consumers, provide insurance for loans, or regulate real estate transactions. Their primary purpose is to buy mortgages from lenders, thus providing those lenders with the capital they need to originate more loans. By doing so, Fannie Mae and Freddie Mac help ensure liquidity in the mortgage market, making it easier for consumers to obtain financing for their homes.

Furthermore, by purchasing these mortgages, they also standardize the terms and conditions of loans, which helps to stabilize the housing market and contribute to overall economic growth. Their actions promote a continuous flow of funds, making it possible for lenders to offer more favorable terms to borrowers. This interaction in the secondary market is essential for maintaining the health and accessibility of mortgage lending in the U.S.