Learn About Fannie Mae Home Loans

Fannie Mae, not to be confused with student loan company Sallie Mae, is the shorthand name given for the Federal National Mortgage Association, and national organization whose roots go all the way back to 1938 and The Great Depression. This is a government-sponsored company that deals exclusively with helping to encourage home ownership. Fannie Mae would do this by providing available capital to the housing market and lend money to people looking to buy a home. This was an especially important role in the beginning, when the large number of failed banks dried up the amount of funds available for anyone to invest or purchase land.

What’s the company setup?

Originally Fannie Mae was a government-run program, although in time this changed to a mixed corporation. This means the company is independent of the government, yet the U.S. government has preferred shares or stock in the company. There’s a strong implicit understanding that the government needs to back the company and the loans they make, but this also means in extreme cases after questionable practices (like the housing bubble that helped lead to the Great Recession of 2008) the government can also step in and assert control in the name of its best interests.

About the housing bubble & conservatorship

The housing bubble bursting in 2008, leading to many major banks failing, was especially hard on Fannie Mae, since their entire business structure revolves around providing capital for buying homes. There was some panic, considering they guaranteed roughly 50% of the home market in the United States, which comes to a staggering $6 trillion.

This is when the government stepped in, claiming conservatorship, which is a  fancy way of saying they more or less took over, loaned over $100 billion to the company for use, and is more or less running things as they pay back that debt and new regulations are passed.

Present day

Fannie Mae is still an extremely important player when it comes to backing housing loans in the general market. They still provide a large percentage of the active loans in the housing market and are backed by the government, which still has them in conservatorship.

Meanwhile Fannie Mae continues to make new loans as needed, continuing on with business as usual.