Fannie Mae

Fannie Mae is the largest participant in the secondary mortgage market. It was originally a government agency but became a private shareholder-owned corporation, known as a Government Sponsored Enterprise (GSE). Following the housing crisis of 2008, it was placed under the conservatorship of the Federal Housing Finance Agency (FHFA) to ensure its stability. Fannie Mae buys FHA, VA, and conventional loans from lenders, ensuring those lenders have the capital to write new mortgages. Once Fannie Mae purchases these loans, it bundles them into pools and sells them to investors as Mortgage-Backed Securities (MBS). This process turns individual home loans into liquid assets that can be traded on the stock market.