Fannie and Freddie: All in the Family

The Banks have been loaning us money that is non existent. In turn they have been selling those loans to Fannie and Freddie. They have been buying those loans with money that is non existant. At the end, all the capital they needed to show was 1.4%. But, we needed to make a down payment of 20% to with the bank to get the loan.

1)Where did the people's down payment capital plus all the equity which has accrued go? That money represents real savings. Were does the people's savings continue to exist in the bank which issued the mortgage or in Fannie and Freddie?