Fannie Mae - Federal National Mortgage Association - FNMA

AAA

DEFINITION of 'Fannie Mae - Federal National Mortgage Association - FNMA'

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 - Federal National Mortgage Association - FNMA'

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 ...
  2. House Price Index - HPI

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

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

    A U.S. government agency created by the Housing and Economic ...
  5. Ginnie Mae - Government National ...

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

    A stockholder-owned, government-sponsored enterprise (GSE) chartered ...
Related Articles
  1. What does FNMA stand for?
    Credit & Loans

    What does FNMA stand for?

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

    How Fannie Mae And Freddie Mac Were ...

  3. Fannie Mae and Freddie Mac, Boon Or ...
    Insurance

    Fannie Mae and Freddie Mac, Boon Or ...

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

    Top 6 U.S. Government Financial Bailouts

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center