Glossary

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Fannie Mae

Fannie Mae was started in the late 1930s by the federal government.  The Federal Housing Authority authorized Fannie Mae to purchase FHA mortgages so that funding available for lending was kept steady.  In 1968, the company became private and broadened its operations and now is monitored by the United States Congress.   Fannie Mae seeks to keep mortgage funds available for low to middle income Americans.

Though the company is in the lending market, Fannie Mae does not lend directly to home buyers.  Instead, the company works with lenders by providing money for mortgages, so that the lenders can continue to offer mortgages to home buyers.  When a buyer finances the purchase of his or her home through a bank, Fannie Mae can then purchase the mortgage and bundle it with other mortgages that they have purchased.  Those mortgages are then sold to investors who profit from the interest that the homeowners pay on their mortgages.  The money that the investors pay to Fannie Mae is then used to buy more mortgages.

Though Fannie Mae is connected to the federal government, the company does not receive any backing or funding from the government.  The company also pays a great deal of money in taxes.

Fannie Mae also operates on a number of principals that they consider key to their success.  The company seeks to foster diversity, innovation and employee development.  Fannie Mae strives for teamwork, leadership and customer service, as well, in order to be a leading company in their field.
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