Federal National Mortgage Association
The United States Federal Government
created the Federal National Mortgage Association
(FNMA - aka Fannie Mae
) in 1938
to establish a secondary market for mortgages insured by the Federal Housing Administration
(FHA). Fannie Mae buys mortgages on the secondary market, pools them and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market helps to replenish the supply of lendable money for mortgages and ensures that money continues to be available for new home purchases.
In 1968, the Federal National Mortgage Association was partitioned into two separate entities - one wholly owned by the government and known as the Government National Mortgage Association (Ginnie Mae), and the other to retain the name Federal National Mortgage Association (Fannie Mae). At this time Fannie Mae expanded its charter to buying other sorts of mortgages besides the government insured ones it had traditionally purchased.
Today, Fannie Mae is a consistently profitable American corporation. It receives no government funding or backing.
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