Community Affairs – Affordable Mortgage Lending Center
Affordable Mortgage Lending Guide,
Part I: Federal Agencies and Government Sponsored Enterprises
Fannie Mae is a government-sponsored enterprise, or GSE, created by the federal government to ensure access to home mortgage credit. It provides liquidity to the mortgage market by buying loans conforming to certain standards from banks and other loan originators, thus enabling lenders to make new loans with the proceeds from the sale. Fannie Mae then issues securities backed by pools of these mortgages that it sells to capital markets. It guarantees that investors in these securities will receive prompt payment of the principal and interest due on the mortgages. Banks may sell loans to Fannie Mae individually or pooled with other loans, directly or through intermediaries.