What is Fannie Mae?

Fannie Mae is the common name for the Federal National Mortgage Association. It's a U.S. government-sponsored enterprise (GSE) that plays a crucial role in the mortgage market.

• Purchases mortgages: Fannie Mae doesn't lend money directly to homeowners. Instead, it buys mortgages from lenders

• Securitization: Fannie Mae packages these mortgages into mortgage-backed securities (MBS) and sells them to investors.

• Market stability: By buying mortgages, Fannie Mae provides liquidity to the mortgage market, allowing lenders to make more loans.

• Standardization: Fannie Mae sets underwriting standards for mortgages, which helps ensure consistency in the mortgage industry.

In essence, Fannie Mae acts as a middleman between lenders and investors, helping to keep the mortgage market functioning smoothly. 

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