Re: how does fannie mae and freddy mac make money?
they get paid by owning the mortgages that Wells, WAMU... are servicing. The interest paid on loans is profit so when they purchase a mortgage in the secondary market they are actually buying payments. Hope that helps.
PS when a servicer modifies a Fannie or Freddie loan they servicer actually loses some of the income, the basics there is more to know but do not want to bore you with details.
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