Fannie Mae, which stands for the Federal National Mortgage Association, is an important part of the mortgage business. Here is a general description of Fannie Mae and what it does.
Fannie Mae: A Little Help
Throughout U.S. history, both the federal and state governments have used money to change how people act. Even though it sounds harsh, it's actually a pretty boring idea. Taxes are put on things like cigarettes to get us to stop smoking and keep us from doing bad or unhealthy things. On the bright side, similar financial incentives are made to encourage good things, like buying a home.
People often say that owning a home is the American Dream. In fact, it's one of the most important things that keeps the middle class going in our country. Most Americans have to save money for a home, even if they don't want to. Property goes up in value over time, so you're getting richer no matter what you do with your credit cards.
More people own homes now than ever before in history. This is because of a number of things, including the fact that mortgages are easy to get and let us borrow large amounts of money over long periods of time. This chance is pushed by the federal government through Fannie Mae and other programmes.
People often make the mistake of thinking that Fannie Mae is a part of the government. Not at all. The company is a public company, just like Microsoft, Google, or your favourite stock.
A second myth is that Fannie Mae gives mortgages to borrowers directly. Again, it does not. Instead, the company gives mortgage lenders cash so that they can keep giving you home loans.
In 1938, the government of the United States made Fannie Mae. Its goal was to give money to a secondary mortgage market that needed it. If you've ever had a mortgage, it's likely that your loan has been sold to another lender on occasion. These secondary lenders don't usually work with the public directly. Instead, after the application process, they buy the mortgages and get the payments. The government made Fannie Mae to make sure there was enough money in the secondary market to keep the mortgage business running smoothly. In order to do this, Fannie Mae was given the job of buying mortgages that were insured by the Federal Housing Administration, or FHA.
Fannie Mae went private in 1968 and grew its secondary mortgage business by buying both FHA loans and loans that were not insured by the FHA. Fannie Mae became a major player in the mortgage business because of this change. Since it became a public company, it has bought more than 63 million mortgages, which has helped a lot of us get homes.
Even though Fannie Mae is a company that is traded on the stock market, it is still connected to the federal government through a congressional charter. The charter gives Congress the power to watch over Fannie Mae and make sure it stays true to its original goal. Fannie Mae, on the other hand, doesn't get any of our taxes.
