The Federal National Mortgage Association, normally known as Fannie Mae, is a government sponsored enterprise (GSE) that purchases a large number of residential mortgages in the U.S. The mortgages are bought from banks and other lending institutions in order for them to supply more home loans for the public.
Fannie Mae can be viewed as the link between lenders, the federal government, and public investors. The government agency purchases the bulk of mortgages from lending institutions, hold them or package them into government-backed securities, and put them on the market for public investors.
As a borrower, you will never deal directly with Fannie Mae, but you do reap the rewards of the GSE’s work.
- As a first-time buyer, you can benefit from the educational programs offered by Fannie Mae.
- There are more customized mortgages with more affordable payment structures.
- Interest rates and origination fees are lower because of Fannie Mae.