About Fannie Mae:

Fannie Mae (Federal National Mortgage Association) is a government-sponsored enterprise (GSE) that gives liquidity and stability to the United States housing finance system by buying mortgages from lenders, packaging them into mortgage-backed securities (MBS), and assuring timely payment of principal and interest. This secondary mortgage market process frees up capital for lenders to provide more loans, ultimately making more affordable mortgages available for homebuyers and renters across the country.
How Fannie Mae Operates

  1. Buys Mortgages from Lenders:
    Fannie Mae purchases residential mortgage loans from mortgage companies and banks.
  2. Securitizes the Loans:
    The purchased loans are grouped together and turned into mortgage-backed securities (MBS).
  3. Issues Guarantees:
    Fannie Mae promises to pay the timely principal and interest on these securities to investors.
  4. Provides Liquidity:
    Fannie Mae brings a worldwide pool of investors into the mortgage market by selling these securities.
  5. Boosts Lending:
    The funds generated from the sale of MBS enable lenders to leverage their assets for additional lending, thereby raising the overall supply of affordable housing finance.
    Role and Impact
    Makes Housing More Affordable:
    Fannie Mae ensures that people and families have access to affordable mortgage loans as well as supports workforce rental housing.
    Brings Stability:
    The company supplies liquidity (available money) and stability to the thousands of home loan originating institutions.
    Supports 30-Year Fixed-Rate Mortgages:
    Fannie Mae’s actions keep the common 30-year fixed-rate mortgage alive, providing homeowners with stable payments and security.
    Serves as a GSE:
    Fannie Mae is one of the two large GSEs along with Freddie Mac that are key to the smooth operation of the U.S. mortgage market.
    History
    Established in 1938
    Fannie Mae was founded during the Great Depression as part of the New Deal to broaden the secondary mortgage market.
    Publicly Traded:
    It has been a publicly traded company since 1968 while still being a government-sponsored enterprise.
    Government Conservatorship:
    In 2008, at the height of the financial crisis, the U.S. government seized the operations of Fannie Mae and Freddie Mac.