The nickname for the Federal National Mortgage Association — a government-sponsored enterprise that buys mortgages from lenders, packages them into securities, and sells them to investors.
Fannie Mae — the Federal National Mortgage Association — is one of two giant government-sponsored enterprises (GSEs) that essentially run the U.S. mortgage market. Founded in 1938 to make homeownership more accessible during the Great Depression, Fannie buys mortgages from lenders, packages them into mortgage-backed securities, and sells those securities to investors.
Why does that matter to you? Because Fannie's purchase rules are the rules for most conventional mortgages. When a lender originates a conforming loan, they generally do it expecting to sell it to Fannie Mae (or Freddie Mac). That means the loan has to meet Fannie's guidelines for credit score, DTI, documentation, property type, etc.
You'll never write a check to Fannie Mae. But its underwriting standards quietly shape every conforming conventional loan in America.
Example
Your $400K conventional mortgage from Benchmark closes today. Within weeks, Benchmark may sell that loan to Fannie Mae, who packages it with thousands of others into a security. You continue paying your monthly bill to a loan servicer — same terms, same rate. Fannie owns the loan; the servicer manages it.
Also known as
Federal National Mortgage Association, FNMA, Fannie
Source:
Fannie Mae