Which government-sponsored enterprise is known for buying mortgages from lenders?

Which government-sponsored enterprise is known for buying mortgages from lenders?

• A. Freddie Mac
• B. Fannie Mae
• C. Ginnie Mae
• D. HUD

Answer: (B)

Fannie Mae, or the Federal National Mortgage Association, is specifically focused on purchasing mortgages from lenders. This activity plays a crucial role in the secondary mortgage market by providing liquidity, stability, and affordability in the mortgage market. By buying these mortgages, Fannie Mae enables lenders to free up capital, making it possible for them to issue more loans to homebuyers. This process helps support homeownership and ensures that mortgage credit remains available. Fannie Mae operates by bundling these mortgages into mortgage-backed securities, which are then sold to investors. This mechanism is essential for maintaining an active housing finance system. Its integral role in the mortgage market also differentiates it from other entities such as Freddie Mac, which also buys mortgages but operates under slightly different guidelines and focuses, and Ginnie Mae, which primarily deals with government-insured loans. HUD, or the Department of Housing and Urban Development, is a federal agency responsible for national policy and programs related to housing. However, it does not buy mortgages from lenders.

Fannie Mae, or the Federal National Mortgage Association, is specifically focused on purchasing mortgages from lenders. This activity plays a crucial role in the secondary mortgage market by providing liquidity, stability, and affordability in the mortgage market. By buying these mortgages, Fannie Mae enables lenders to free up capital, making it possible for them to issue more loans to homebuyers. This process helps support homeownership and ensures that mortgage credit remains available.

Fannie Mae operates by bundling these mortgages into mortgage-backed securities, which are then sold to investors. This mechanism is essential for maintaining an active housing finance system. Its integral role in the mortgage market also differentiates it from other entities such as Freddie Mac, which also buys mortgages but operates under slightly different guidelines and focuses, and Ginnie Mae, which primarily deals with government-insured loans. HUD, or the Department of Housing and Urban Development, is a federal agency responsible for national policy and programs related to housing. However, it does not buy mortgages from lenders.