What Fannie Mae Is:
Fannie Mae is short for Federal National Mortgage Association (FNMA). It was created in 1938 to
establish a
secondary
market for mortgages insured by the Federal Housing Administration(FHA). In 1968 it became a
shareholder-owned company that can buy any mortgages, not just those insured by the government.
It is listed on the
NYSE.
What Fannie Mae Does:
Fannie Mae buys mortgages from banks, a process known as buying on the secondary market. It
then packages these into
mortgage-backed securities, and resells them to investors on Wall Street. Fannie Mae also
provides financing for development of affordable rental housing. A certain percentage of Fannie
Mae’s mortgages must serve low and moderate-income families.
How Fannie Mae Affects the U.S. Economy:
Fannie Mae stimulates the housing market, which comprises
10% of the
economy. By doing so, it creates wealth for homeowners who receive greater equity from higherpriced
homes. It also allows low and moderate income families to get a financial cushion beneath
them, and a higher standard of living, in the form of home ownership.
How Fannie Mae Affects You:
Fannie Mae helps you in two ways:
- If you are a homeowner, then Fannie Mae helps keep mortgage costs low by making funding for
mortgages more readily available.
- If you are a low or moderate income family, teacher, police officer, firefighter or health care worker,
Fannie Mae will provide you with a mortgage you couldn’t otherwise afford.
