Overview
Federal National Mortgage Association, known as Fannie Mae, is a government-sponsored enterprise chartered by the U.S. Congress to support liquidity and stability in the secondary mortgage market. It purchases mortgages and related securities in the secondary mortgage market and makes other investments that increase the affordable housing supply. Fannie, along with fellow GSE The Federal Home Loan Mortgage Corp., is able to borrow money at lower cost because of an implicit government guarantee.
Amid the mortgage meltdown, the government took over Fannie and Freddie Mac in 2008 and the companies have been in a sort of limbo. Since then, the mortgage giants have shifted their focus from making profits to carrying out government housing policy. As far as long-term strategy goes, the government has yet to decide their roles, according to The Wall Street Journal. Fed Chairman Ben Bernanke recently called them a "platypus" -- neither fish nor fowl. Big changes are expected at the firm.
One option is for Uncle Sam to keep them on as government agencies with some mortgage-backed securities guarantees and a mandate to make mortgages available to low-income borrowers. Some Republicans want to cut all ties, including the implied debt guarantee and affordable-housing mandate. Another proposal is to remake them into something like public utilities with capped profits or make them highly-regulated cooperatives owned by lenders.