Fannie Mae

Fannie Mae
ajay_suresh · CC BY 2.0 · source
Name	Fannie Mae
Type	Public
Traded as	OTCBB: FNMA
Industry	Financial services
Founded	1938
Founder	Franklin D. Roosevelt
Headquarters	Washington, D.C.
Key people	Hugh Frater, Timothy J. Mayopoulos
Products	Mortgage-backed securities
Revenue	$112.9 billion (2020)
Net income	$14.2 billion (2020)
Total assets	$3.5 trillion (2020)
Total equity	$17.8 billion (2020)
Owner	United States Department of the Treasury

Fannie Mae. As a major player in the United States housing market, Fannie Mae works closely with FHA, VA, and Rural Housing Service to provide affordable housing options. Fannie Mae's activities are overseen by the FHFA, which also regulates Freddie Mac, a similar GSE. The company's operations are influenced by various Congressional acts, including the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 and the Housing and Economic Recovery Act of 2008.

● History

Fannie Mae was established in 1938 as part of President Franklin D. Roosevelt's New Deal program, with the goal of providing liquidity to the mortgage market and making housing more affordable for American citizens. The company was initially a subsidiary of the FNMA, but it was later privatized in 1968 and became a GSE. Fannie Mae's history is closely tied to that of Freddie Mac, which was created in 1970 to compete with Fannie Mae in the secondary mortgage market. The two companies have worked together with other organizations, such as the MBA and the NAR, to promote affordable housing and support the United States housing market. Fannie Mae has also collaborated with Fed officials, including Alan Greenspan and Ben Bernanke, to address issues related to monetary policy and financial stability.

● Operations

Fannie Mae's operations involve purchasing and securitizing mortgage loans from lenders, such as Wells Fargo, Bank of America, and JPMorgan Chase. The company then packages these loans into MBS, which are sold to investors, including pension funds, insurance companies, and hedge funds. Fannie Mae's operations are supported by its relationships with various financial institutions, including Goldman Sachs, Morgan Stanley, and Citigroup. The company also works with non-profit organizations, such as the NFCC and the FCAA, to provide financial education and support to homebuyers.

● Products_and_Services

Fannie Mae offers a range of products and services, including conventional loans, FHA loans, and VA loans. The company also provides mortgage insurance and credit enhancement products to help lenders manage their risk. Fannie Mae's products and services are designed to support the United States housing market and promote affordable housing, particularly for low-income and minority households. The company has worked with various government agencies, including the HUD and the Department of the Treasury, to develop programs such as the MyCommunityMortgage and the HomeReady mortgage.

● Regulation_and_Controversies

Fannie Mae is regulated by the FHFA, which oversees the company's operations and ensures its compliance with various laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act. The company has faced several controversies over the years, including criticism of its subprime lending practices and its role in the 2008 financial crisis. Fannie Mae has also been the subject of Congressional hearings and investigations, including those conducted by the House Financial Services Committee and the Senate Banking Committee. The company has worked with various regulatory agencies, including the SEC and the Fed, to address issues related to financial regulation and consumer protection.

● Financial_Performance

Fannie Mae's financial performance is closely tied to the United States housing market and the overall state of the economy. The company's revenue and profitability are influenced by factors such as interest rates, housing prices, and mortgage demand. Fannie Mae has reported significant profits in recent years, including $14.2 billion in net income in 2020. The company's financial performance is also influenced by its relationships with various financial institutions, including Merrill Lynch and Goldman Sachs. Fannie Mae has worked with rating agencies, such as Moody's Investors Service and Standard & Poor's, to maintain its credit rating and ensure its access to capital markets.

● Role_in_the_US_Housing_Market

Fannie Mae plays a critical role in the United States housing market, providing liquidity to the mortgage market and supporting the availability of affordable housing. The company's activities have a significant impact on the economy, particularly during times of recession or financial crisis. Fannie Mae has worked with various government agencies, including the Fed and the Department of the Treasury, to develop programs such as the HAMP and the HARP. The company has also collaborated with non-profit organizations, such as the NHC and the CRL, to promote affordable housing and support homeownership initiatives. Fannie Mae's role in the United States housing market is closely tied to that of other GSEs, including Freddie Mac and the FHLB.