What are government-sponsored enterprises (GSE) primarily created to do?

Government-sponsored enterprises (GSEs) primarily focus on funding loans to borrowers, particularly in the housing market. Their main objective is to enhance the availability and affordability of credit for homebuyers and homeowners. They achieve this by purchasing mortgages from lenders, thereby providing capital that can be used to issue more loans. This process helps to stabilize the housing market and support homeownership opportunities, making financing more accessible for individuals.

GSEs like Fannie Mae and Freddie Mac play an integral role in the housing finance system by promoting liquidity in the mortgage market. By ensuring that funds are available for lenders to offer loans, they contribute to a stable housing finance environment, making it easier for consumers to obtain loans at reasonable rates.

While options concerning regulation, insurance, and monitoring state financial systems may be relevant to understanding the broader financial landscape and the roles of other institutions, they do not capture the primary purpose of GSEs, which is specifically tied to funding and enhancing mortgage accessibility for borrowers.