The Federal National Mortgage Association, commonly known as Fannie Mae, is a leading source of financing for mortgage lenders in the United States. Established by Congress in 1938 and currently operating under the conservatorship of the Federal Housing Finance Agency (FHFA), Fannie Mae plays a critical role in the U.S. housing finance system. The company does not originate loans directly to consumers; instead, it operates in the secondary mortgage market. It purchases residential mortgage loans from banks, credit unions, and other financial institutions, and either holds these mortgages in its portfolio or packages them into mortgage-backed securities (MBS) that are sold to investors worldwide.
Fannie Mae's business model is primarily driven by guaranty fees. In exchange for assuming the credit risk and guaranteeing the timely payment of principal and interest on its MBS, the company charges lenders a fee. Its operations are divided into two main segments: Single-Family, which deals with properties having four or fewer units, and Multifamily, which involves residential buildings with five or more units. In 2024, Fannie Mae generated over $29 billion in net revenues, supported by a massive guaranty book of business exceeding $4.1 trillion.
Geographically, Fannie Mae operates exclusively within the United States, providing liquidity to local and national lenders across all 50 states. Its competitive position is unique due to its status as a GSE, which historically provided an implicit government guarantee that lowered its borrowing costs. Alongside its sister organization, Freddie Mac, Fannie Mae dominates the secondary mortgage market, guaranteeing a significant portion of all outstanding U.S. residential mortgage debt.
