Fannie Mae

Fannie Mae is the official name for the for Federal National Mortgage Association (FNMA)

Why was Fannie Mae created?

Fannie Mae was created in 1938 in order to help establish a secondary market for mortgages that were insured by the Federal Housing Administration ( FHA). However, in 1968, when it became a shareholder-owned company , it was able to buy any type of mortgage and not just Federal Housing Administration ( FHA ) insured mortgages.

How does this government agency work?

Fannie Mae does not lend mortgages. It buys mortgages from financial institutions, which are then packaged into mortgage-backed securities that are sold to Wall Street investors. The idea behind doing this is to help banks use the money they receive by sale of their mortgages to help support further mortgages.

How has Fannie Mae helped to benefit the community?

Fannie Mae has provided several benefits to the community. Here’s a look at what these are:

• It provides financing for development of affordable rental housing.
• It efforts have made mortgage more affordable to people with a low or middle income level.
• It has helped to expand the country’s stock of quality affordable housing.
• It helps people to make renovations or home improvements using an affordable home renovation mortgage. This mortgage from Fannie Mae is referred to as a HomeStyle mortgage.

Fannie Mae has gone a long way in helping lenders to make more home loans available to people from all walks of life by providing them with much needed credit guarantees, technology and other services.