What is Fannie Mae

What is Fannie Mae


A government sponsored mortgage company to help all your home mortgage issues is in fact a blessing in disguise for many existing home loan users & investors. One such enterprise is the Fannie Mae. In this article we will discuss more about Fannie Mae:What is Fannie Mae

Fannie Mae stands for Federal National Mortgage Association of the USA. It is a government sponsored enterprise known as GSE. Fannie Mae was chartered by the US Congress in 1968. Fannie Mae is headquartered in Washington D.C. As it is a GSE, it became a public company in 1970 and is now publicly traded. The latest agreement with the Treasury entails Fannie Mae to get capital assistance to rectify any net worth deficiency it incurs till the year 2012.

The main objective of Fannie Mae is to provide affordable home loans to America’s middle to lower class citizens. It also provides liquidity & stability to the home mortgage market in the US. Fannie Mae deals with buying & holding loans and issues mortgage backed securities which are guaranteed. It mainly operates in the secondary loan market in the US.

Fannie Mae doesn’t directly provide home mortgage to consumers, but gives the same using mortgage brokers/partners & bankers. Fannie Mae thus makes sure that its mortgage partner has sufficient funds to provide loans to those wanting to buy a house at affordable rates.

Fannie Mae’s principal activity is to buy mortgage loans from approved sellers for cash or for mortgage backed securities. By doing this, Fannie Mae helps banks get money to provide more loans and that is one of the main reasons for the liquidity in the US Housing & credit market.

Fannie Mae’s three major business areas consists of – Single or Family, Community Development through housing & capital market. Fannie Mae’s revenue comes from returns on mortgage investments & from guaranty fees for credit risk taking. Fannie Mae helps home owners who are not able to pay their mortgage payments through their Home Affordable Program.

Fannie Mae provides many options for such existing home owners such as: option for refinance & repayment, option for temporarily suspending/reducing monthly loan payment rate through forbearance, modifying the terms of original mortgage agreement, through short sale, deed for lease program and deed in lieu of foreclosure program etc. Not only this, it also extends help for those planning to buy a new home.

An understanding of government backed Fannie Mae’s services hence is useful for any new home loan user.

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