What is the Federal National Mortgage Association?


Quick Answer

The Federal National Mortgage Association is a federal agency that provides residential mortgage credit in the U.S. secondary mortgage market by buying mortgages from lending institutions such as banks, mortgage brokers and credit unions, and selling them as securities to investors. It is also known as Fannie Mae.

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Full Answer

Fannie Mae was established in 1938 to help the housing market during the Great Depression. Because of Fannie Mae's guarantee, mortgage lending institutions can make more affordable housing loans to the public, thereby helping build a nationally sustainable housing finance system. However, due to the subprime mortgage crisis of 2007, Fannie Mae was overwhelmed with bad mortgage loans and had to receive government bailout money to keep it from bankruptcy, and it was delisted from the New York Stock Exchange. However, in 2014, it completely repaid all government support it received and provided about $134 billion in liquidity to the housing market as of the third quarter of 2015.

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