Let me first state I'm not a finance guy and just trying to get a better understanding of debt. All my life I've heard is that "the bank loans you money to buy your house" but that doesn't exactly seem to be the case. Every mortgage I've ever had or any more I know anyone else that has gets the initial mortgage from a bank but that mortgage is then sold to Fannie Mae/Freddie Mac.
But Freddie Mac is government sponsored (what does that even mean?) that buys mortgages and sells mortgage backed securities. It's market cap is only $450mil but holds $2Trillion in assets. Apparently the federal reserve buys these Mortgage backed securities to the tune of owning ~98% of residential morgates. Is the Fed introducing currency into the market through inflated values of housing?
In other words, my understanding is you go to buy a house and you need a mortgage. The debt flow goes Bank --> Freddie Mac --> Federal Reserve at the same time the federal reserve is printing record amounts of money. Is the housing market how they are distributing the printed money to the masses causing the record levels of inflations we're seeing?
This is a rather complicated, but the really dumbed down version is, banks (in 95% of cases) do in fact originate the Mortgage loan (Meaning they put up the money originally). They rarely ever hold onto them though. What they'll do is sell them on the secondary mortgage market (Kind of like a stock market for mortgages) by bundling them into Mortgage Backed Securities (MBS). Yes Fannie Mae/Freddie Mac do in fact buy quite a lot of mortgages and sell a lot of MBS's as well. But the overwhelming majority are sold to mutual funds and other exchange traded funds, or insurance companies and retirement funds.
So basically this is the lifecycle of a Mortgage:
You-->Bank-->Mortgage Packer (Fannie Mae/Freddie Mac)--> Various institutional Investors (Insurance Companies, Retirement Funds, Mutual Funds, The Fed, etc.)