Fannie Mae is the nickname of the Federal National Mortgage Association (FNMA). It was created by Congress to buy mortgages from federally chartered banks. In theory, this helps to make mortgage lending easier for both banks and borrowers. Instead of waiting 30 years for a mortgage to be repaid, the bank can sell the mortgage to Fannie Mae and use the proceeds to write more mortgages for more borrowers. Fannie Mae, in turn, typically sells the mortgage to another mortgage buyer. Other organizations, such as Freddie Mac and Ginnie Mae, serve similar purposes.
Fannie Mae has recently been implicated in promoting lending practices that have been viewed as contributing to the “mortgage meltdown” of the late 2000’s.
