Fannie Mae

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Mortgage Dictionary -> Fannie Mae

In the United States, the Federal National Mortgage Association is a publicly traded company commonly referred to as Fannie Mae. On the New York Stock Exchange (NYSE) its symbol is FNM. Its headquarters are located at 3900 Wisconsin Avenue, Washington, DC.

In 1938, as part of President Franklin D. Roosevelt's New Deal, FNMA was founded as a government agency to provide liquidity for the secondary mortgage market. In 1968, it was changed over to a private corporation and the responsibility of guarantor of government-issued mortgages fell to Ginnie Mae, the Government National Mortgage Association.

The purpose of FNMA is to provide affordable housing the US market in order to grant stability to the nation's housing finance system without regard to economic conditions. By dealing with the secondary mortgage market, FNMA helps to ensure that bankers and other mortgage lenders have enough funds available to lend to home buyers at reasonable rates.

Here's how FNMA works: It buys loans from banks and other mortgage originators and sells them, repackaged, on the secondary mortgage market. FNMA gives the mortgage lenders fresh money in order for them to make new mortgage loans. Despite what most people think, FNMA gets no direct funding from the United States government, nor are FNMA securities insured by them. Fannie Mae does not receive any direct government aid, as a rule.

However, on September 7, 2008, the Federal Housing Finance Agency (FHFA), placed Fannie Mae under its conservatorship, after a report that the federal government planned to place it under its control to stabilize it.

Time will tell how Fannie Mae, the Federal National Mortgage Association, will fare in the light of its trouble and the depressed housing economy in the United States. However, many believe that the federal government would step in and revive Fannie Mae if it began to fail. Assuming that the United States taxpayers will take on the burden is a popular belief with the markets in order that the US mortgage markets not fail.

Consumer confidence and the consistency of borrowers will go a long way to strengthening the US economy and the Federal National Mortgage Association.