Federal National Mortgage Association (FNMA)

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:

1. If you are a homeowner, then Fannie Mae helps keep mortgage costs low by making funding for mortgages more readily available.
2. 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.