Federal National Mortgage Association

Fannie Mae
Entity Type
Founding Date

Fannie Mae is a government-sponsored enterprise chartered to incite homeownership and provide liquidity to the mortgage market. It is a leading source of financing for mortgage lenders, granting them access to affordable mortgage financing in all markets. Fannie Mae neither originate mortgage loans nor lend money directly to borrowers. It mortgages from lenders and helps facilitate the flow of capital into the housing market by issuing and guaranteeing mortgage-related securities.


  • As a secondary mortgage market participant, Fannie Mae keeps funds flowing to lenders by purchasing or guaranteeing mortgages issued by credit unions, banks, thrifts, and other financial institutions. 
  • After purchasing mortgages on the secondary market, Fannie Mae pools them to form mortgage-backed securities. Its mortgage-backed securities are then purchased by institutions, such as insurance companies, pension funds, and investment banks.
  • Fannie Mae guarantees payments of principal and interest on its MBS.
  • Fannie Mae has its own portfolio, commonly referred to as a retained portfolio, which invests in its own and other institutions’ mortgage-backed securities. It issues debt, called agency debt, to fund its retained portfolio.
  • By investing in the mortgage market, Fannie Mae creates liquidity for lenders, which in turn allows them to underwrite or fund additional mortgages.