The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, was a US publicly traded government sponsored enterprise (GSE). It was a stockholder-owned corporation authorized to make loans and loan guarantees. Fannie Mae was the leading participant in the U.S. secondary mortgage market, which serves to provide liquidity to the primary mortgage market to ensure that mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies have enough funds to lend to home buyers. As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market. As a result, the corporations were particularly affected by the housing market downturn and credit crunch that began in 2007. On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA (see Federal takeover of Fannie Mae and Freddie Mac). The action is "one of the most sweeping government interventions in private financial markets in decades".
History
Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
In 1968, to remove the activity of Fannie Mae from the annual balance sheet of the federal budget, it was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).
Fannie Mae was put under a conservatorship of the U.S. Federal government on Sunday, 2008-09-07: Federal takeover of Fannie Mae and Freddie Mac.
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