Housing Finance Working Paper Series

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This paper examines the borrower and neighborhood characteristics of mortgages purchased by Fannie Mae and Freddie Mac, the two major Government-Sponsored Enterprises (GSEs) in the conventional secondary mortgage market. The GSEs' mortgage purchases are compared to all mortgages originated in the conventional conforming loan market, including originations retained in portfolio by banks and thrift institutions. The analysis is based on Home Mortgage Disclosure Act (HMDA) data on home purchase loans originated in metropolitan areas between 1992 and 1996, thus updating the authors' earlier analysis based on 1995 HMDA data. The paper finds that while the GSEs have improved their affordable lending efforts, they continue to lag the primary market in providing funding for underserved borrowers and their communities. There is room for further increases in purchases of affordable loans by Fannie Mae and, especially, Freddie Mac.