Federal National Mortgage Association (Fannie Mae)
American government-sponsored enterprise that provides liquidity, stability, and affordability to the U.S. housing and mortgage markets through secondary mortgage market operations.
Company Type
public
Founded
1938
Headquarters
Washington, D.C., USA
Stock
OTC: FNMA
About Federal National Mortgage Association (Fannie Mae)
Who owns Fannie Mae?
Fannie Mae's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FNMA) trades on OTC markets but has limited economic rights under conservatorship.
Fannie Mae's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FNMA) trades on OTC markets but has limited economic rights under conservatorship.
Is Fannie Mae publicly traded?
Fannie Mae's common stock (FNMA) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
Fannie Mae's common stock (FNMA) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
What is Fannie Mae's role in the housing market?
Fannie Mae operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Fannie Mae and Freddie Mac together guarantee approximately 70% of new U.S. mortgage originations.
Fannie Mae operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Fannie Mae and Freddie Mac together guarantee approximately 70% of new U.S. mortgage originations.
When was Fannie Mae founded?
Fannie Mae was established in 1938 by the U.S. Congress as part of the New Deal. It was converted to a private shareholder-owned corporation in 1968 and went public on the NYSE. It was placed into FHFA conservatorship in September 2008.
Fannie Mae was established in 1938 by the U.S. Congress as part of the New Deal. It was converted to a private shareholder-owned corporation in 1968 and went public on the NYSE. It was placed into FHFA conservatorship in September 2008.
What is Fannie Mae's net income?
In FY2024, Fannie Mae reported net income of approximately $17.4 billion, continuing its pattern of strong profitability under conservatorship.
In FY2024, Fannie Mae reported net income of approximately $17.4 billion, continuing its pattern of strong profitability under conservatorship.
What is the difference between Fannie Mae and Freddie Mac?
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are both GSEs that operate in the secondary mortgage market, but they were created at different times and have slightly different focuses. Fannie Mae (1938) primarily purchases mortgages from commercial banks and mortgage companies, while Freddie Mac (1970) was created to purchase mortgages from savings institutions (thrifts). Both are under FHFA conservatorship since 2008.
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are both GSEs that operate in the secondary mortgage market, but they were created at different times and have slightly different focuses. Fannie Mae (1938) primarily purchases mortgages from commercial banks and mortgage companies, while Freddie Mac (1970) was created to purchase mortgages from savings institutions (thrifts). Both are under FHFA conservatorship since 2008.
History of Federal National Mortgage Association (Fannie Mae)
Fannie Mae was established in 1938 by the U.S. Congress as part of President Franklin D. Roosevelt's New Deal legislation. The Federal National Mortgage Association was created to address the housing crisis of the Great Depression, during which mortgage lending had collapsed and millions of Americans had lost their homes.
The original Fannie Mae was a federal agency that purchased FHA-insured mortgages from lenders, providing those lenders with cash to make new loans. This secondary market function was designed to increase the availability of mortgage credit and make homeownership more accessible.
In 1954, Congress reorganized Fannie Mae as a mixed-ownership corporation, with both government and private shareholders. The company began purchasing conventional (non-FHA) mortgages in 1970, significantly expanding its role in the housing finance system.
In 1968, Congress split Fannie Mae into two entities: the current Fannie Mae (converted to a fully private shareholder-owned corporation) and Ginnie Mae (Government National Mortgage Association, which remained a government agency). The split was designed to remove Fannie Mae's activities from the federal budget. Fannie Mae's shares began trading on the New York Stock Exchange.
In 1970, Congress created Freddie Mac (Federal Home Loan Mortgage Corporation) as a competitor to Fannie Mae, with the goal of increasing competition in the secondary mortgage market.
Throughout the 1970s and 1980s, Fannie Mae pioneered the development of the secondary mortgage market. The company created standardized mortgage documentation and underwriting guidelines that made it easier for lenders to sell mortgages to Fannie Mae. It also developed mortgage-backed securities (MBS), which allowed investors to purchase interests in pools of mortgages, dramatically increasing the flow of capital into the housing market.
In the 1990s and 2000s, Fannie Mae grew dramatically, expanding its mortgage portfolio and MBS guarantees to trillions of dollars. The company became one of the largest financial institutions in the world and a major participant in the U.S. financial system.
Fannie Mae's growth was accompanied by increasing risk-taking, particularly in the subprime mortgage market. The company purchased and guaranteed large volumes of subprime and Alt-A mortgages, which were higher-risk loans made to borrowers with weaker credit profiles.
When the U.S. housing market collapsed in 2007-2008, Fannie Mae suffered massive losses on its mortgage portfolio and MBS guarantees. The company's capital was insufficient to absorb these losses, threatening its ability to continue operations.
On September 7, 2008, the U.S. government placed Fannie Mae and Freddie Mac into conservatorship under the newly created Federal Housing Finance Agency (FHFA). The U.S. Treasury committed to providing up to $100 billion in financial support to each company (later increased to $200 billion and then made unlimited) to ensure their continued operations.
Under conservatorship, Fannie Mae has returned to profitability and has repaid more than $180 billion to the U.S. Treasury through dividend payments on the senior preferred stock. Despite this repayment, the conservatorship remains in place, and the company's future structure is uncertain.
Priscilla Almodovar became CEO in December 2022, succeeding Hugh Frater. Almodovar previously served as President and CEO of New York State Homes and Community Renewal.
In FY2024, Fannie Mae reported net income of approximately $17.4 billion, continuing its pattern of strong profitability under conservatorship.
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Stock Information
Federal National Mortgage Association (Fannie Mae) Ownership: Pros & Cons
Advantages
- +FY2024 net income of approximately $17.4 billion demonstrates strong profitability under conservatorship
- +Critical role in providing liquidity to the U.S. housing market, supporting homeownership for millions of Americans
- +Government backing through FHFA conservatorship provides stability and implicit guarantee
- +Desktop Underwriter (DU) automated underwriting system is used by thousands of lenders, creating significant market infrastructure
- +Has repaid more than $180 billion to the U.S. Treasury through dividend payments
Considerations
- -Conservatorship since 2008 creates uncertainty about the company's long-term structure and ownership
- -Subject to significant political and regulatory risk, with ongoing debate about GSE reform
- -Common and preferred shareholders have limited economic rights under conservatorship
- -Accounting scandal (2004-2006) damaged the company's reputation for financial integrity
- -Concentration of mortgage market risk in two GSEs (Fannie Mae and Freddie Mac) creates systemic risk concerns
Frequently Asked Questions About Federal National Mortgage Association (Fannie Mae)
Who owns Fannie Mae?
Fannie Mae's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FNMA) trades on OTC markets but has limited economic rights under conservatorship.
Is Fannie Mae publicly traded?
Fannie Mae's common stock (FNMA) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
What is Fannie Mae's role in the housing market?
Fannie Mae operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Fannie Mae and Freddie Mac together guarantee approximately 70% of new U.S. mortgage originations.
When was Fannie Mae founded?
Fannie Mae was established in 1938 by the U.S. Congress as part of the New Deal. It was converted to a private shareholder-owned corporation in 1968 and went public on the NYSE. It was placed into FHFA conservatorship in September 2008.
What is Fannie Mae's net income?
In FY2024, Fannie Mae reported net income of approximately $17.4 billion, continuing its pattern of strong profitability under conservatorship.
What is the difference between Fannie Mae and Freddie Mac?
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are both GSEs that operate in the secondary mortgage market, but they were created at different times and have slightly different focuses. Fannie Mae (1938) primarily purchases mortgages from commercial banks and mortgage companies, while Freddie Mac (1970) was created to purchase mortgages from savings institutions (thrifts). Both are under FHFA conservatorship since 2008.
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