What is "Fannie Mae" (FNMA)? Fannie Mae is the nickname of the Federal National Mortgage Association (FNMA), a U.S. government-sponsored enterprise (GSE) chartered by Congress to provide liquidity and stability to U.S. housing and mortgage markets.
What does Fannie Mae do?
Fannie Mae tries to ensure that primary lenders (mortgage companies, banks, etc.) have the funds necessary to make affordable loans to consumers. Like its cousin Freddie Mac (FHLMC), Fannie Mae does not make loans directly to home buyers, dealing instead in the secondary mortgage market. Fannie Mae funds its mortgage investments primarily by issuing debt securities in the domestic and international capital markets.
Fannie Mae concentrates its operations in three areas: Single-Family, Housing and Community Development, and Capital Markets. Fannie Mae's business activities are aimed at providing services, products, and solutions to its lending and housing partners. The overall goal of Fannie Mae, and in fact the mission for which it was chartered, is to increase the total amount of housing funds available in the U.S., thereby making home ownership and rental housing more available and affordable.
History of Fannie Mae
Fannie Mae was created in 1938 as a federal agency. Its organizational structure was changed in 1968 to a private shareholder-owned company. In reality, Fannie Mae remained a quasi-government agency. When the bubble burst in the U.S. residential real estate market in 2007-08, many of the questionable management decisions and accounting practices of Fannie Mae's directors were exposed. The company began to lose vast amounts of money, and was eventually taken over by the U.S. government in September 2008, when James Lockhart, Director of the Federal Housing Finance Agency (FHFA), appointed his agency as conservator of Fannie Mae. In addition, the U.S. Department of the Treasury agreed to provide up to $100 billion of capital as needed to ensure the company continues to provide liquidity to the housing and mortgage markets. Many experts claim this figure could be much higher, approaching $200 billion or more when all is said and done.
Terms, Definitions, and Concepts: Economy, Finance and Investment, Management, Real Estate