Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that buy mortgages from lenders, package them into mortgage-backed securities, and guarantee timely payment to investors. By doing so, they provide liquidity, stability, and affordability in the U.S. housing market. They set underwriting standards for conforming loans, which lenders follow to ensure loans are eligible for purchase. This process helps keep mortgage rates competitive and ensures continuous funding availability for homebuyers and refinancers across the country.