{"id":4633,"date":"2021-11-22T13:47:39","date_gmt":"2021-11-22T13:47:39","guid":{"rendered":"https:\/\/loanbase.com\/uncategorized\/fannie-mae\/"},"modified":"2023-11-16T19:51:02","modified_gmt":"2023-11-16T19:51:02","slug":"fannie-mae","status":"publish","type":"post","link":"https:\/\/loanbase.com\/learn\/loans\/fannie-mae\/","title":{"rendered":"Fannie Mae Loans"},"content":{"rendered":"

Overview<\/span><\/h2>\n

Fannie Mae (the Federal National Mortgage Association) is a publicly-traded, government-sponsored enterprise (GSE) chartered by Congress for the purpose of increasing homeownership and providing liquidity to the mortgage market. Fannie Mae exists to create affordable housing opportunities around the country.\u00a0<\/span><\/p>\n

Fannie Mae itself <\/span>does not<\/span><\/i> originate loans.\u00a0<\/span><\/p>\n

Instead, the organization purchases and guarantees mortgages via the secondary mortgage market. By investing in mortgages, Fannie Mae creates liquidity for lenders\u2014banks, funds, credit unions\u2014to underwrite more mortgages for prospective homeowners.\u00a0<\/span><\/p>\n

Fannie Mae purchases and guarantees various types of mortgages, including single-family<\/a> and multifamily mortgages.\u00a0<\/span><\/p>\n

In this article, we\u2019ll break down key features of Fannie Mae loans, explore pros and cons, describe common use cases, and much more.\u00a0<\/span><\/p>\n

Wondering whether a mortgage backed by Fannie Mae mortgage is right for you?\u00a0<\/span><\/p>\n

Keep reading!\u00a0<\/span><\/p>\n

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Key Features<\/span><\/h2>\n

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Fannie Mae does not originate mortgage loans.\u00a0<\/span><\/p>\n

Instead, Fannie Mae promotes the flow of funds through the mortgage market by purchasing and\/or guaranteeing mortgages issued by lenders\u2014third parties like credit unions, banks, or other financial institutions.\u00a0<\/span><\/p>\n

After Fannie Mae purchases loans on the secondary mortgage market, it pools these mortgages together as mortgage-backed securities (MBS). A MBS is a security that\u2019s backed by a mortgage (or a pool of mortgages).\u00a0<\/span><\/p>\n

Mortgage-backed securities created by Fannie Mac are then available for purchase by institutions like investment banks, insurance companies, pension funds, and more.\u00a0<\/span><\/p>\n

Fannie Mae guarantees the payment of principal and interest on these MBSs.\u00a0<\/span><\/p>\n

Fannie Mae creates liquidity in the mortgage market by providing funds to lenders through the purchase of their mortgages.\u00a0<\/span><\/p>\n

These lenders then use the funds from the sale of these mortgages to underwrite additional mortgages.\u00a0<\/span><\/p>\n

Last year Fannie Mae provided over $1.4T in liquidity to the mortgage market, helping lower-income Americans buy, refinance, or rent around 6 million homes.\u00a0<\/span><\/p>\n

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Single-Family vs. Multifamily Loans<\/span><\/h2>\n

Single-Family Loans<\/span><\/i><\/h3>\n

Fannie Mae operates along two primary lines of business: Single Family and Multifamily Loans.\u00a0<\/span><\/p>\n

Fannie Mae\u2019s Single-Family business helps mortgage lenders safely, efficiently originate mortgages. Specifically, Fannie Mae provides funding to preserve the standard 30-year, fixed-rate mortgage.\u00a0<\/span><\/p>\n

This type of mortgage lets homeowners benefit from stable, predictable mortgage payments over the life of the loan.\u00a0<\/span><\/p>\n

Fannie Mae\u2019s Single-Family products include:\u00a0<\/span><\/p>\n

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