what is FNMA

A:

FNMA is the acronym and the stock market symbol for the Federal National Mortgage Association, commonly called “Fannie Mae.” This government-sponsored enterprise provides liquidity for the U.S. mortgage market by guaranteeing and purchasing mortgages, indirectly enabling families to buy or rent homes through access to credit. The company's focus is on supporting housing-market recovery by providing access to affordable mortgage credit and helping develop a transparent and sustainable housing-finance system. Created in 1938 as part of the federal government, it became a GSE in 1968 and is still based in Washington DC.Probably the only one in the world conceived by the president..

FNMA’s customers include banks, credit unions, insurance companies, and state and local housing finance agencies. The company purchases mortgages from these institutions, segmenting and packaging them into Fannie Mae mortgage-backed securities that the company guarantees. Segments include single-family, multifamily and capital market loans. The securities are then sold to dealers or investors seeking a fixed income investment, with income coming from the interest on the mortgages. Typical MBS investors are insurance companies, pension funds and foreign governments. Some MBSs are held by Fannie Mae for its retained portfolio. It obtains funding by issuing debt securities in the domestic and international capital markets.The problem here lies by the fact toxic loans  creep in to the book as it a government organisation ie. usual bureaucracy. this what the present government wish to  get away from

Fannie Mae and its MBSs are not guaranteed by the U.S. Government. But in 2008, in a collapsing housing market that brought the words “under water” and “foreclosure” to homeowners' everyday conversations, FNMA ran out of money. Its stock price fell. It was placed into conservatorship under the Federal Housing Finance Authority, received a government bailout to remain solvent and was dropped from the S&P 500 Index. In 2010, FNMA announced it could no longer meet the New York Stock Exchange listing requirements and began trading as an over-the-counter (OTC) stock. In August 2012, the company's dividend obligations were revised, so the U.S. Treasury began receiving any corporate profits at the end of each quarter.