Many people who need property financing, mortgages, student loans and grants, investing, and saving advice; are very familiar with Fannie Mae. When wondering through school campus, you may hear fellow students saying “Fannie Mae” this and “Fannie Mae” that. “She” is not a person. Actually, Fannie Mae is not a tangible object whatsoever. Who is Fannie Mae exactly? The name is actually a warped nickname for “Federal National Mortgage Association.”
What is the Federal National Mortgage Association
Fannie Mae is a Government Sponsored Enterprise that was formed during the Great Depression. Under certain business ethics, banks are allowed to write an limited amount of loans to qualified identities. Fannie Mae is beneficial to banks because the enterprise actually purchases mortgage loans – subsequently managing the loan. This allows federal banks wiggle room to write and extend loans to people and businesses. This allow lenders to reinvest assets into more lending ventures. Fannie Mae is a lucrative and integral identity for banks and corresponding lenders. Fannie Mae is not explicitly backed up by the government, but it is regarded as much too important of a financial identity for it to fail.
Benefits of Fannie Mae
- Lower mortgage rates
- Improved liquidity for mortgage markets
- Facilitating mortgage accessibility to consumers – connecting home owners to comprehensive mortgage loans
- Stimulating economic growth