Fannie Mae

At Fannie Mae, we are in the American Dream business. Our Mission is to tear down barriers, lower costs, and increase the opportunities for homeownership and affordable rental housing for all Americans. Because having a safe place to call home strengthens families, communities, and our nation as a whole. The National Mortgage Association of Washington is chartered to boost nation's depressed housing market. The Association is authorized to begin buying and selling loans guaranteed by the Veterans Administration. The Association is divided in two: Fannie Mae continues in the secondary market sector as a private, shareholder-owned entity, while the newly created Government National Mortgage Association, or Ginnie Mae, guarantees FHA and VA mortgages. Fannie Mae buys its first conventional mortgage--those not backed by FHA or VA. Franklin D. Raines takes over the leadership of Fannie Mae; the mission statement is changed. Fannie Mae was originally designed to help relieve the nation's housing problems during the Depression. Title III of the Federal Housing Act of 1934 provided for the incorporation of private national mortgage associations to create a national secondary mortgage market. But in February 1938, since no private associations had yet formed, the Federal Housing Administration chartered the National Mortgage Association of Washington to buy and sell mortgages. Its name was changed three months later to the Federal National Mortgage Association, or FNMA, and it has been known as Fannie Mae ever since. The federal government took an interest in facilitating home mortgages as a way to invigorate the residential construction industry as well as to provide adequate housing for its citizens. The Depression had taken a heavy toll on private lending institutions. Fannie Mae's primary purpose was to establish a secondary mortgage market to rejuvenate original lenders such as mortgage banks, savings and loan associations, and commercial banks by stimulating enough cash flow to allow them to make new loans. Fannie Mae bought mortgages insured by the Federal Housing Administration (FHA) from these private lenders, and either kept them for its own portfolio or sold them to private investors. The secondary market Fannie Mae created also made private lenders confident about making FHA-insured mortgages, which some had been reluctant to do. Once assured that they could easily turn these mortgages into cash if they needed to, lenders were more inclined to extend mortgage credit. In addition, the secondary mortgage market helped smooth out discrepancies between capital-rich and capital-poor regions of the country. Fannie Mae could buy mortgages from the South or West and sell them to investors in the capital-rich East. In this way a Boston banker could invest in Arizona mortgages while a local lender in Arizona was no longer limited in the number of loans he could make by the cash deposits of his customers. Under Sam Husbands, who presided over the association from 1938 to 1948, Fannie Mae bought 66,947 FHA-insured mortgages and sold 49,048. In 1949, Fannie Mae expanded its activities to include buying and selling loans guaranteed by the Veterans Administration (VA). As veterans returned from the war and the great American baby boom got underway, Fannie Mae was busier than ever. The association bought 133,032 mortgages in 1950 compared with 6,734 in 1948. Some critics viewed Fannie Mae's growth with alarm, however, charging that the company had brought government too far into the private sector. In 1954, Congress responded with the Federal National Mortgage Association Charter Act, which turned Fannie Mae into a mixed ownership corporation. The Treasury of the United States was issued nonvoting preferred stock, and nonvoting common stock was sold to mortgage lenders, who were now required to own stock in order to sell mortgages to Fannie Mae. Fannie Mae was made responsible for special assistance for certain mortgages when the