What is Fannie Mae?

Fannie Mae, short for the Federal National Mortgage Association, is a government-sponsored enterprise established in 1938. It was created with the aim of promoting stability and liquidity in the U.S. housing market. Fannie Mae operates in the secondary mortgage market, which means it buys residential mortgages from lenders, thereby providing them with fresh funds to originate new loans. By purchasing these mortgages, Fannie Mae allows lenders to mitigate the risks associated with holding long-term mortgages. This process also helps to ensure that mortgage lenders have access to additional capital, enabling them to continue offering affordable home loans to borrowers. The organization plays a critical role in the functioning of the housing market, facilitating the flow of funds and expanding homeownership opportunities for Americans.