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FNMA (Federal National Mortgage Association)

Categories: Bonds, Real Estate, Banking

The Federal National Mortgage Association, a.k.a. Fannie Mae.

It's jointly owned by the government and the public, with the goal of encouraging banks to offer more mortgages. Like Freddie Mac, Fannie Mae buys mortgages, bundles them up, and sells them as investments. Fannie Mae, though, buys its mortgages mostly from commercial banks (Freddie Mac deals with the smaller fry).

So how does this make mortgages more affordable for you? It keeps cash flowing through the housing and mortgage market and reduces the risk of default (in theory) so banks are more likely to lend money to you when you want to buy a house. 

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