Finance
Which federal agency is responsible for chartering, regulating, and supervising Fannie Mae and Freddie Mac?
AThe Federal Reserve
BThe Federal Housing Finance Agency (FHFA)✓ Correct
CThe Department of Housing and Urban Development (HUD)
DThe Federal Deposit Insurance Corporation (FDIC)
Explanation
The FHFA was created in 2008 to regulate and supervise Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. It placed Fannie and Freddie into conservatorship during the 2008 financial crisis.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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