Understanding Fannie Mae: Unlocking Homeownership Opportunities§
**Chartered by Congress and Privately Owned
Fannie Mae, or the Federal National Mortgage Association, is a pivotal entity in the US housing financing system. Though it’s chartered by Congress, it operates as a shareholder-owned private company. This unique setup allows Fannie Mae to fulfill its mission while functioning within a competitive marketplace.
**How Fannie Mae Works
Fannie Mae operates by purchasing mortgages from an array of lenders across the United States. Once acquired, these mortgages are sold as securities on the secondary mortgage market. This process frees up liquidity for the original lenders, enabling them to issue new loans to potential homeowners.
**A Brief History
Established in 1938 as a government-controlled institution, Fannie Mae was designed to bolster the housing market. In 1968, it transitioned into the private sector, becoming a privately-held company. This transition allowed for greater financial flexibility and the ability to trade mortgages more effectively.
**Impact on Homeownership
By facilitating the flow of capital through the mortgage market, Fannie Mae plays a crucial role in making homeownership accessible, particularly for low- and middle-income families. By freeing up funding for primary lenders, it ensures that more people have the opportunity to secure home loans.
**See Also: Freddie Mac
An essential counterpart to Fannie Mae, Freddie Mac works in tandem to support a robust and dynamic housing finance system.
Related Terms: Freddie Mac, secondary mortgage market, home loans, mortgage-backed securities.
