Fannie Mae Progress Report
Fannie Mae FAQ for Digital Newsroom
We serve the people who house America. We make sure that banks, credit unions, and other mortgage lenders have the funds they need to create housing opportunities that are affordable to very low–, low–, moderate–, and middle–income Americans.
Fannie Mae’s activities enhance the liquidity and stability of the United States mortgage market. Our two business segments are single–family housing and multifamily housing, through which we provide funds to mortgage lenders by purchasing mortgage assets as well as issuing and guaranteeing mortgage-related securities. This helps facilitate the flow of additional funds into the mortgage market. We also move some credit risk away from Fannie Mae and taxpayers through transactions that transfer a portion of the credit risk on some of the single–family loans we acquire. Like our single–family business, our multifamily business works with our lender customers to acquire and securitize multifamily mortgage loans. Our multifamily housing business addresses the rental housing needs of a wide range of the population in all markets across the country, with a focus on supporting affordable rental housing and underserved markets.
For more information, please see Fannie Mae’s 2018 Form 10–K filed with the SEC on February 14, 2019.
During the Great Depression, the United States recognized a need for reliable and steady funding for housing. Congress created Fannie Mae in 1938 to help banks finance mortgages, including a new long-term, fixed–rate loan that would enable more Americans to purchase a home.
Read more about our history.
Our principal customers are lenders that operate within the primary mortgage market where mortgage loans are originated and funds are loaned to borrowers. Our customers include mortgage banking companies, savings and loan associations, savings banks, commercial banks, credit unions, community banks, specialty servicers, insurance companies, and state and local housing finance agencies. Lenders originating mortgages in the primary mortgage market often sell them in the secondary mortgage market in the form of whole loans or in the form of mortgage–related securities.
We operate in the secondary market as a leading source of liquidity for mortgage lenders, providing access to affordable mortgage financing at all times. Fannie Mae is also a market leader in financing for multifamily rental properties. We work with a national network of participating lender customers to finance apartment buildings through our Delegated Underwriting and Servicing (DUS®) program. DUS leverages private capital through a unique risk–sharing model to finance multifamily housing in communities throughout America.
Here are some of the many ways Fannie Mae is improving the housing market and redefining the way America does housing and mortgage finance:
- Fannie Mae’s Day 1 Certainty™ brings greater speed and clarity to lenders and borrowers, setting a new standard for lending in America. We have given lenders new tools to validate key data about borrower income and assets as well as home value. Now, lenders can deliver more loans faster without sacrificing quality, allowing them to lend with confidence to qualified borrowers and provide a better customer experience.
- Fannie Mae’s Desktop Underwriter® provides lenders a comprehensive credit risk assessment that determines whether a loan meets Fannie Mae’s eligibility requirements.
- We are introducing new options, such as our flexible HomeReady® mortgage, to expand affordable lending opportunities for creditworthy borrowers. And, existing homeowners can finance or pay off energy–saving improvements using our HomeStyle® Energy mortgage.
- Fannie Mae has created new markets to efficiently transfer mortgage credit risk to private investors, protecting America’s taxpayers and attracting global capital to the U.S. housing market. Before, when we bought or securitized mortgages for single–family homes, we acquired and held on to the credit risk. Now, we distribute some of the risk through our capital markets and reinsurance transactions. And, we use our industry–leading innovations to manage credit risk through the entire life cycle of the loan. These capabilities make our credit risk transfer transactions attractive to investors, enhancing our ability to facilitate the flow of private capital throughout the market.
- Our economists, analysts, and thought leaders uncover important trends in housing and share their insights to help improve the housing market at large. By making our expert research readily available to the public, we enable better transparency and informed decision–making resulting in a safer, smarter housing market for all Americans.
- We are partnering with FinTech companies to help the industry bring the digital mortgage closer to reality.
- Over the last seven years, Fannie Mae has invested in the Green Financing business to support better quality housing that has a positive and measurable financial, social, and environmental impact on multifamily housing in the U.S.
These are just some of the ways Fannie Mae is strengthening the housing and mortgage finance system in America.
No, we do not lend money directly to consumers. We buy loans from lenders and, in turn, replenish their funds so they can make additional loans. In doing so, we help our partners provide consumers across the country with access to affordable housing financing – whether they are looking for an affordable apartment rental, to buy a home, or to refinance an existing mortgage to lower their payments.
We offer flexible and affordable solutions that enable mortgage lenders, credit unions, banks, and community organizations to make homes accessible to more Americans, in big cities and small towns alike. Our solutions are based on in–depth market and business analysis and are backed by our solid underwriting standards.
For example, in 2015 we launched HomeReady®, an improved affordable lending product designed to help meet the diverse needs of underserved populations, including low– and moderate–income, minority, and immigrant households. Features of HomeReady include:
- Flexible eligible income sources (e.g., non–borrower household income, income from renters and boarders, and non–occupant borrower income such as from extended family members)
- Down payments as low as 3.0 percent
- Favorable pricing
- Reduced or cancelable private mortgage insurance
Fannie Mae is also a market leader in financing for multifamily rental properties. Our multifamily business works with lenders to help make access to affordable and workforce rental housing available in all markets across the country.
- In 2017, approximately 90 percent of the multifamily units we financed were affordable to families earning at or below 120 percent of the median income in their area, providing support for both workforce housing and affordable housing
- We also provided $1.9 billion in financing for Manufactured Housing Communities in 2017, helping thousands of families seeking desirable, high–quality home rental and ownership options – especially in rural parts of the country
Fannie Mae’s Loan Lookup tool helps you quickly determine if Fannie Mae owns your loan – which you’ll need to do before you can modify your mortgage or qualify for foreclosure prevention options.
Everything we do at Fannie Mae is designed to strengthen America’s housing industry and build stronger communities. Making it easy for our employees to contribute to the communities where they live and work is an important part of that mission. Through our SERVE volunteer program, employees can lead or participate in activities that support eligible nonprofit organizations. Whether helping to end homelessness, working to stabilize hard–hit neighborhoods, or providing education and resources to local youth, Fannie Mae employees are eager to serve. To learn more, visit the Serving Our Community page.
“GSE” refers to a government-sponsored enterprise such as Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. GSEs help bring funding to the housing market with oversight from the government. While these enterprises are subject to government oversight and regulation, the U.S. government does not guarantee their securities or other obligations.
The company is regulated primarily by the Federal Housing Finance Agency (FHFA).
Conservatorship is a legal process intended to stabilize troubled institutions. The objective is to maintain normal business operations and restore financial safety and soundness.
Fannie Mae and Freddie Mac were placed into Federal conservatorship in September 2008 as a result of the financial crisis, which severely damaged housing finance markets and exposed the GSEs to mortgage–related losses. While in conservatorship, Fannie Mae remained in all markets during the crisis to provide continued access to mortgage financing, stabilize the housing market and help millions of people avoid foreclosure.
To learn more, visit the FHFA Conservatorship page.
While credit risk sharing is not new at Fannie Mae, it has evolved dramatically since the financial crisis. Before, when we bought or securitized mortgages for single–family homes, we acquired and held on to the credit risk. Now, we distribute some of the risk through our Connecticut Avenue Securities™ (CAS), Credit Insurance Risk Transfer™ (CIRT™), and front–end lender risk sharing transactions. We use industry–leading innovations to manage credit risk through the entire life cycle of the loan. These capabilities make our credit risk transfer transactions attractive to investors, enhancing our ability to facilitate the flow of private capital throughout the market and protect America’s taxpayers.
Fannie Mae acts as an intermediary between lenders and investors in credit risk transfer, allowing lenders to access the private markets for credit risk. By creating a suite of risk–sharing vehicles in the market, Fannie Mae aims to accomplish its overall goals of protecting taxpayers, minimizing the impact on borrowers and lenders, improving market efficiency, and creating liquidity, all of which enable Fannie Mae to continue to provide reliable, large–scale access to affordable mortgage credit.
To learn more, visit our Credit Risk Sharing page.