Understanding Fannie Mae: Your Guide to the Federal National Mortgage Association

What is Fannie Mae?

Fannie Mae, a nickname for the Federal National Mortgage Association (FNMA), is one of the two primary entities in the secondary mortgage market, alongside Freddie Mac (Federal Home Loan Mortgage Corporation or FHLMC). These government-sponsored enterprises (GSEs) play a crucial role in the housing finance system by purchasing a substantial share of the residential mortgage loans originated each year.

Purpose and Operations

Originally an agency of the federal government, Fannie Mae transitioned to a semiprivate organization. It mainly purchases home loans from lenders, providing them with liquidity, so they can offer more mortgages to buyers. These loans are generally converted into mortgage-backed securities and sold to investors, supporting continuous availability of affordable housing finance.

Historical Context

On September 6, 2008, amidst the financial crisis, Fannie Mae was placed under conservatorship by the Federal Housing Finance Agency (FHFA). This step was taken to stabilize the market, with the U.S. government taking an 80% ownership stake in the company. While still operating as a GSE, Fannie Mae continues to be publicly traded.

Contact Information

• Address:
  • Fannie Mae
  • 3900 Wisconsin Avenue, NW
  • Washington, DC 20016-2892
• Phone: 800-2FANNIE (800-232-6643)
• Website: www.fanniemae.com

FAQs

What is Fannie Mae’s main function in the housing market?

Fannie Mae primarily purchases mortgage loans from lenders and bundles them into mortgage-backed securities that are then sold to investors. This process helps maintain the flow of capital in the housing market, ensuring that lenders have the funds to offer more home loans.

Why was Fannie Mae placed under conservatorship?

Fannie Mae was placed under conservatorship during the 2008 financial crisis to stabilize the housing market. This move allowed the Federal Housing Finance Agency to manage its operations and mitigate further market disruptions.

How does Fannie Mae influence home loan availability?

By purchasing mortgages from lenders, Fannie Mae provides the liquidity that helps those lenders continue issuing new loans. This supports mortgage availability and affordable home financing options.

Is Fannie Mae still a government agency?

No, Fannie Mae is no longer a government agency, though it operates as a government-sponsored enterprise. It remains under conservatorship, with the government holding a significant ownership stake.

Can home buyers interact directly with Fannie Mae?

Generally, home buyers do not directly interact with Fannie Mae. Instead, they work with lenders that originate the loans which Fannie Mae may later purchase.

Related Terms: Freddie Mac, Government-Sponsored Enterprises, Housing Market, Mortgage-Backed Securities.