Fannie Mae - Federal National Mortgage Association - FNMA

A A A

DEFINITION

A government-sponsored enterprise (GSE) that was created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae is a publicly traded company which operates under a congressional charter that directs Fannie Mae to channel its efforts into increasing the availability and affordability of homeownership for low-, moderate- and middle-income Americans.






INVESTOPEDIA EXPLAINS

Fannie Mae purchases and guarantees mortgages that meet its funding criteria. Through this process it secures mortgages to form mortgage-backed securities (MBS). The market for Fannie Mae's MBS is extremely large and liquid. Pension funds, insurance companies and foreign governments are among the investors in Fannie Mae's MBS. In order to promote homeownership, Fannie Mae also holds a large portfolio of its own and other institution's MBSs, known as its retained portfolio. To fund this portfolio, Fannie Mae issues debt known in the market place as agency debt.

Fannie Mae's "little brother" is Freddie Mac. Together, Fannie Mae and Freddie Mac purchase or guarantee between 40 to 60% of all mortgages originated in the United States annually, depending upon market conditions and consumer trends.


RELATED TERMS
  1. Agency MBS Purchase

    The purchase of mortgage-backed securities issued by government-sponsored enterprises ...
  2. House Price Index - HPI

    A broad measure of the movement of single-family house prices in the U.S. Apart ...
  3. Federal Home Loan Bank Act

    An act passed by the Hoover administration in 1932 that was designed to encourage ...
  4. Federal Housing Finance Agency ...

    A U.S. government agency created by the Housing and Economic Recovery Act of ...
  5. Residual Interest

    1. A charge for borrowing money that accrues on a credit card account between ...
  6. Pass-Through Rate

    The rate on a securitized asset pool - such as a mortgage-backed security (MBS) ...
  7. Pool Factor

    The percentage of the original principal that is left to be distributed in a ...
  8. FHA Loan

    A mortgage issued by federally qualified lenders and insured by the Federal ...
  9. Ginnie Mae - Government National ...

    A U.S. government corporation within the U.S. Department of Housing and Urban ...
  10. Freddie Mac - Federal Home Loan ...

    A stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress ...
Related Articles
  1. Fannie Mae and Freddie Mac, Boon Or ...
    Insurance

    Fannie Mae and Freddie Mac, Boon Or ...

  2. Profit From Mortgage Debt With MBS
    Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

  3. If my mortgage lender goes bankrupt, ...
    Home & Auto

    If my mortgage lender goes bankrupt, ...

  4. Top 6 U.S. Government Financial Bailouts
    Insurance

    Top 6 U.S. Government Financial Bailouts

  5. Should You Refinance Your Mortgage When ...
    Options & Futures

    Should You Refinance Your Mortgage When ...

  6. Microeconomics
    Personal Finance

    Microeconomics

  7. How Fannie Mae And Freddie Mac Were ...
    Economics

    How Fannie Mae And Freddie Mac Were ...

  8. A Nightmare On Wall Street
    Insurance

    A Nightmare On Wall Street

  9. Fannie Mae, Freddie Mac And The Credit ...
    Insurance

    Fannie Mae, Freddie Mac And The Credit ...

  10. Are mortgage-backed securities backed ...
    Investing

    Are mortgage-backed securities backed ...

comments powered by Disqus
Hot Definitions
  1. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  2. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  3. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  4. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  5. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
  6. Negative Carry

    A situation in which the cost of holding a security exceeds the yield earned. A negative carry situation is typically undesirable because it means the investor is losing money. An investor might, however, achieve a positive after-tax yield on a negative carry trade if the investment comes with tax advantages, as might be the case with a bond whose interest payments were nontaxable.
Trading Center