“What is Fannie Mae? I hear about it on the news all the time, but they never explain what it is.”
Answer:
Fannie Mae is the nickname for the Federal National Mortgage Association, a government-sponsored enterprise (GSE) chartered by Congress to provide liquidity, stability, and affordability to U.S. housing and mortgage markets.
Rather than making home loans directly to consumers, it operates in the “secondary mortgage market” by working with mortgage lenders to ensure they have funds to lend to home buyers at affordable rates.
Fannie Mae pays for its mortgage investments primarily by issuing debt securities in the domestic and international capital markets.
It was established as a federal agency in 1938, and chartered by Congress in 1968 as a private shareholder-owned company. But in September 2008, the Federal Housing Finance Agency was appointed conservator of Fannie Mae. The result is that Treasury will provide Fannie Mae with capital as needed through 2012 in order to ensure that Fannie Mae can continue providing liquidity and stability to U.S. housing and mortgage markets.
