Fannie Mae
The Federal National Mortgage Association, a government-sponsored enterprise that buys conventional loans from lenders.
Fannie Mae was chartered by Congress to provide liquidity, stability, and affordability to the US housing market. It doesn't lend directly to consumers; instead it buys conforming loans from primary-market lenders, packages them into mortgage-backed securities, and sells those securities to investors.
By buying loans in volume, Fannie Mae frees up lender capital to make more loans, which keeps the mortgage market flowing. Its underwriting guidelines, through the Desktop Underwriter system, define what a conforming loan looks like and effectively set the standards for most of the conventional market.
Along with Freddie Mac, Fannie has been in federal conservatorship since 2008. Its long-term structure remains a topic of ongoing policy debate, but its role as the largest buyer of US residential mortgages has been continuous.
Related terms
Other terms you'll see alongside Fannie Mae
The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise that buys conventional loans from lenders, complementing Fannie Mae.
A conventional loan whose amount falls within the limit eligible to be purchased by Fannie Mae or Freddie Mac.
Mortgages not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac.
The lender's formal review of a loan application to confirm it meets program guidelines and is acceptable to fund.
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