Fannie Mae

Fannie Mae, formally the Federal National Mortgage Association, is a U.S. government-sponsored enterprise established in 1938 during the New Deal. Its purpose is to support the secondary mortgage market rather than make most home loans directly to consumers. The company purchases qualifying mortgages from banks, mortgage companies, and other lenders, pools them into mortgage-backed securities, and guarantees timely payment of principal and interest to investors subject to the terms of its securities. By returning cash to lenders, this model enables them to originate additional mortgages and helps maintain the availability of long-term fixed-rate housing finance across the United States. The organization was created in response to the housing and banking distress of the Great Depression, when widespread unemployment and mortgage defaults weakened local lenders and made home finance scarce. In its early decades, Fannie Mae primarily supported loans insured by federal housing programs. Legislative changes in 1954 created a mixed-ownership structure, while the Housing and Urban Development Act of 1968 divided the former organization into Fannie Mae and Ginnie Mae. Fannie Mae became a privately held, publicly traded corporation, whereas Ginnie Mae remained a federal government entity that guarantees securities backed by federally insured or guaranteed loans. In 1970, Fannie Mae received authority to purchase conventional mortgages, and Freddie Mac was created to increase competition in the secondary market. Fannie Mae's central business lines are single-family and multifamily mortgage finance. Its single-family activities support mortgages secured by one- to four-unit properties, including conventional conforming loans, refinancing, affordable-housing programs, and products intended to assist borrowers with limited down payments or nontraditional credit profiles. Its multifamily business finances apartment buildings and other rental housing through mortgage purchases, guarantees, and specialized lending programs. Fannie Mae also provides underwriting standards, data, technology, risk-management tools, and market infrastructure used by lenders and investors. The institution became deeply associated with the U.S. mortgage crisis. During the 1990s and early 2000s, policymakers encouraged the government-sponsored enterprises to expand support for low- and moderate-income borrowers and underserved communities. At the same time, Fannie Mae faced competition from private-label securitizers and pressure to maintain earnings and market share. The housing downturn, rising defaults, falling property values, accounting controversies, and uncertainty over mortgage-credit risk severely weakened the company. In September 2008, the Federal Housing Finance Agency placed Fannie Mae into federal conservatorship, and the U.S. Treasury provided financial support under a senior preferred stock purchase agreement. Fannie Mae remains a publicly traded company, but its common and preferred securities have operated under the consequences of conservatorship and Treasury arrangements since 2008. It continues to perform a major role in the U.S. housing-finance system, purchasing and guaranteeing mortgages and issuing or supporting mortgage-backed securities. Its long-term status, capital structure, and possible release from conservatorship remain matters of public policy and regulatory debate. The company is therefore both a commercial mortgage-finance enterprise and a systemically important institution operating under unusually close federal oversight.

Fannie Mae was created by Congress in 1938 as part of the New Deal response to the Great Depression. Mortgage lending at the time was frequently short term, depended on local savings institutions, and was vulnerable to widespread defaults and bank failures. The new organization, initially called the National Mortgage Association of Washington, supplied a secondary source of funds for lenders by purchasing federally insured mortgages. This helped banks replenish their balance sheets and extend more housing credit. For roughly three decades, Fannie Mae had a dominant position in the secondary mortgage market. In 1950 it became part of the Housing and Home Finance Agency. The Federal National Mortgage Association Charter Act of 1954 changed its ownership structure into a mixed corporation, with government-held preferred stock and privately held common stock. The Housing and Urban Development Act of 1968 then separated the former entity into two organizations. Fannie Mae became a privately held, publicly traded corporation, while Ginnie Mae remained within the federal government and retained an explicit full-faith-and-credit guarantee. The change also removed Fannie Mae's activities from the federal budget. In 1970, legislation authorized Fannie Mae to purchase conventional mortgages that were not insured by the Federal Housing Administration, Veterans Administration, or other federal programs. Freddie Mac was established during the same period to provide competition. Fannie Mae went public in 1970 and developed the mortgage pass-through market, issuing its first mortgage-backed security in 1981. Securitization became the company's defining mechanism: mortgages acquired from lenders were pooled, securities were sold to investors, and Fannie Mae guaranteed the scheduled payments. The Housing and Community Development Act of 1992 formally directed Fannie Mae and Freddie Mac to support affordable housing while remaining financially sound. The Department of Housing and Urban Development received authority to establish housing goals for the enterprises, including goals relating to low- and moderate-income borrowers and underserved areas. During the late 1990s and early 2000s, Fannie Mae faced pressure to broaden access to mortgage credit. It also faced increasingly strong competition from private-label securitization sponsored by investment banks. The pre-crisis market produced conflicting incentives. Fannie Mae maintained standardized underwriting rules and traditionally focused on conforming mortgages, but pressure to protect market share and meet policy objectives contributed to broader risk-taking. Private-label securitizers expanded rapidly and packaged increasingly complex and risky loans, including adjustable-rate and low-documentation products. As home prices declined and defaults increased after 2006, the value of mortgage assets and guarantees deteriorated. Fannie Mae also faced investigations into accounting irregularities and the reliability of reported earnings. In September 2008, the Federal Housing Finance Agency placed Fannie Mae into conservatorship. The Treasury entered into a senior preferred stock purchase agreement and supplied capital support intended to preserve the company's ability to perform its housing-finance function. The intervention made Fannie Mae one of the central institutions in the federal response to the financial crisis. Its common and preferred shares continued to trade, but the company operated under federal control and subject to Treasury and FHFA terms. After the crisis, Fannie Mae concentrated on restoring operational stability, supporting the conforming mortgage market, improving credit-risk management, and expanding affordable-housing and rental-housing programs. It introduced risk-transfer structures intended to move some mortgage credit exposure to private investors while retaining its guarantee and market-making role. The company continues to purchase and guarantee mortgages, issue mortgage-backed securities, and support single-family and multifamily lending. Because no comprehensive legislative replacement for the government-sponsored-enterprise system has been enacted, Fannie Mae's conservatorship, capitalization, and eventual institutional structure remain unresolved.

1. 2014HomeReady launches

   Fannie Mae launches HomeReady to provide more flexible financing for qualified low- and moderate-income borrowers.

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2. 2008Federal conservatorship begins

   FHFA places Fannie Mae under conservatorship during the mortgage and financial crisis.

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3. 1992Affordable-housing obligations are formalized

   Federal legislation gives Fannie Mae and Freddie Mac explicit affordable-housing responsibilities and establishes housing goals.

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4. 1981First Fannie Mae mortgage pass-through

   The company issues its first mortgage-backed security based on pooled mortgage loans.

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5. 1970Conventional mortgages and public trading

   Fannie Mae receives authority to purchase conventional loans, and its shares begin public trading.

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6. 1968Fannie Mae becomes a private corporation

   The former Fannie Mae is divided into Fannie Mae and Ginnie Mae; Fannie Mae becomes privately held while Ginnie Mae remains a government agency.

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7. 1954Mixed-ownership structure adopted

   A federal charter amendment restructures the organization as a mixed-ownership corporation.

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8. 1938Fannie Mae is established

   Congress creates the National Mortgage Association of Washington to provide liquidity to mortgage lenders during the Great Depression.

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A government-sponsored secondary-market utility for residential mortgage liquidity, stability, affordability, and standardized housing finance.

• Single-Family Mortgage FinanceMortgage finance1938

  Fannie Mae purchases or guarantees qualifying mortgages secured by one- to four-unit residential properties. The business supports conventional fixed-rate and adjustable-rate loans, refinancing, affordable lending, and standardized underwriting. By buying loans from approved lenders, Fannie Mae supplies funding that lenders can recycle into new originations.

• Mortgage-Backed SecuritiesSecuritization1981

  Fannie Mae pools eligible mortgages into securities and guarantees scheduled principal and interest payments to investors under the applicable program terms. These securities connect global capital markets with U.S. residential lending and allow mortgage originators to reduce the amount of credit and interest-rate exposure retained on their own balance sheets.

• Multifamily FinanceCommercial mortgage finance

  The multifamily platform supports financing for apartment buildings and rental housing through approved lenders and specialized execution channels. It includes standard and affordable-housing transactions and is intended to preserve access to stable, long-term financing for rental properties.

• HomeReadyAffordable mortgage2014

  HomeReady is an affordable conventional mortgage program for eligible borrowers. It is designed to accommodate lower down payments, qualifying income from permitted sources, and other features intended to improve access to homeownership while retaining documented underwriting and repayment standards.

• 2014HomeReady

  United States

  Fannie Mae introduced HomeReady as an affordable-lending program aimed at creditworthy low- and moderate-income households and communities historically underserved by mortgage finance.

  Outcome. The program became an ongoing part of Fannie Mae's affordable single-family product set.

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• 2014Launch HomeReadyProduct launch

  Fannie Mae sought to improve access to conventional mortgage credit for qualified borrowers with limited resources.

  What changed. The company launched HomeReady with flexible eligibility and affordability features.

  Aftermath. HomeReady became an ongoing affordable-mortgage offering.

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• 2008Enter federal conservatorshipOther

  The housing-market collapse and financial crisis threatened Fannie Mae's capital position and its ability to support the mortgage market.

  What changed. FHFA assumed conservatorship and the Treasury provided support under a senior preferred stock purchase agreement.

  Aftermath. Fannie Mae continued operating under federal oversight, with its long-term ownership and capital structure left unresolved.

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• 1970Expand into conventional mortgage financeStrategy

  The secondary mortgage market needed broader coverage beyond federally insured loans.

  What changed. Fannie Mae received authority to purchase conventional mortgages, while Freddie Mac was created to provide competition.

  Aftermath. Conventional mortgage purchases became a core part of Fannie Mae's business model.

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• 1968Separate government-guarantee and secondary-market functionsStrategy

  The federal government sought to separate explicit government-backed mortgage guarantees from Fannie Mae's secondary-market activities and remove the latter from the federal budget.

  What changed. Fannie Mae was converted into a privately held corporation, while Ginnie Mae retained its government role.

  Aftermath. The structure established the modern distinction between Fannie Mae and Ginnie Mae and preceded Fannie Mae's public-market expansion.

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• 2008Mortgage-crisis failure and conservatorshipControversy

  Falling house prices, rising delinquencies, mortgage-market losses, and concerns about the companies' capital position led FHFA to place Fannie Mae into conservatorship. The federal intervention became a major feature of the U.S. financial-crisis response.

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• 2004Accounting and earnings-management controversyControversy

  Fannie Mae faced regulatory findings and public criticism concerning accounting practices, internal controls, earnings recognition, and the conduct of senior management. The controversy led to restated financial results, leadership changes, and intensified efforts to reform oversight of the government-sponsored enterprises.

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• 2025Fannie Mae remains under conservatorship amid housing-finance reform debate

  Fannie Mae continued its mortgage-market role while its capital structure, Treasury claims, and possible future release from conservatorship remained subjects of U.S. policy discussion.

  RegulationOther
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• 2014Fannie Mae expands affordable mortgage offerings

  The company introduced HomeReady, a mortgage product designed to support creditworthy low- to moderate-income borrowers with lower down-payment and flexible underwriting features.

  Product launchCampaign
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• 2008Fannie Mae enters federal conservatorship

  The Federal Housing Finance Agency placed Fannie Mae under conservatorship during the U.S. mortgage crisis, while the Treasury established a support arrangement intended to stabilize the company and the housing-finance system.

  RegulationOther
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1. Fannie Mae
2. Federal Housing Finance Agency Conservatorship
3. Fannie Mae Leadership
4. HomeReady Mortgage