Question
What Is Fannie Mae?
Answer
Fannie Mae was started in 1938 as a GSE, or Government Sponsored Enterprise – a quasi government entity. In 1968, Fannie Mae was converted to a private company and operates in the U.S. housing market.
Its job is to provide sufficient liquidity, or money, to the U.S. housing mortgage market to allow for affordable housing opportunities to U.S. citizens and foreign national inhabitants. Fannie Mae is the street level way of saying FNMA which stands for The Federal National Mortgage Association. Fannie Mae is a publicly traded company on the New York Stock Exchange. FNMA also has a Federal Bank Charter.
What does FNMA do?
Fannie Mae buys and sells mortgages in the secondary mortgage market. The secondary mortgage market is the part of the market that deals with your mortgage after you get it from your mortgage lender. Fannie Mae is a company who can buy your mortgage from your lender. In buying your mortgage from your mortgage company, your mortgage company then has more money to loan to someone else on their mortgage.
Where Does Fannie Mae Get Its Money To Buy Mortgages?
Fannie Mae gets its money to buy mortgages from private investors, Wall Street Investors, and International Investors. The other place where Fannie Mae can get its money is from the U.S. Government. Although it can get money from the U.S. Government it has not had to do this. Neither has Freddie Mac.
Recent News About Fannie Mae and Freddie Mac and U.S. Government
The recent news about Fannie Mae and the federal government backup plan was dealing with the part of Fannie Mae that allows it to get money from the government. Essentially, the federal government gave Fannie Mae and Freddie Mac increased access and ability to access federal funds should either of the companies need to.
From all reports and news that I have seen, this backup plan announcement by the U.S. Government was not an indication that Fannie Mae or Freddie Mac are in trouble or need extra cash. The intention of the U.S. Government Fannie Mae and Freddie Mac back up plan was to send a message to investors, mortgage lenders, home owners, home builders – everyone associated with or impacted by the U.S. housing market that the U.S. government is going to ensure that the U.S. housing market continues to operate and that there is sufficient liquidity in the market.
