Fannie Mae

Fannie Mae (the Federal National Mortgage Association, or FNMA) is a "government-sponsored enterprise"[1] (GSE) created in 1938 and today has become the largest underwriter of home mortgages in the United States.

The dismal science
Economics
Economic Systems

  $  Market Economy
  €  Mixed Economy
  ☭ Socialist Economy

Major Concepts
People
v - t - e

Operation

It does not lend money directly to consumers, instead purchasing bundles of loans that banks make on what is called the secondary market. Fannie Mae issues guidelines to mortgage lenders on the documentation required from borrowers to conform to what Fannie Mae agrees to buy.[2] Qualifying guidelines primarily focus on income, credit reports, and loan to value. By Fannie Mae guaranteeing purchase of bundles of mortgages from banks, lenders' funds are quickly replenished and they are able to originate more loans.

Scandals and Crises

In 2006 Fannie Mae was wracked by an accounting scandal. Regulators found a culture of corruption where management overstated earnings by $11 billion during the late 1990s and reaped huge bonuses for themselves.[3]

Following the Great Recession, Fannie Mae currently guarantees against default about $5 trillion in mortgages of American homeowners -- nearly half of all mortgages in the United States. It, alongside sister GSE Freddie Mac (Federal Home Loan Mortgage Corporation, or FHLMC), was nationalized placed under conservatorship by the Federal Housing Finance Agency (FHFA) in September 2008.[4]

Conspiracy

Fannie & Freddie became part of the usual suspects for some people who decided that ~$ big government $~ was solely responsible for the 2008 financial collapse. Exactly how is complicated, but suffice to say it involves a mutated timeline and a dash of truth amongst the BS. Technically, the government did ease regulations on the financial sector, much of which was based on oversight, but that only allowed financial institutions offering mortgages to be far more reckless in their practice offering more and more NINJA (No Income, No Job/Assets) loans.[5]

gollark: ```sqlWITH RECURSIVE c(x)AS(VALUES(99)UNION ALL SELECT x-1 FROM c WHERE x>0),a(x, s)AS(SELECT x,SUBSTR(' bottles',1,(x<>1)+7)||' of beer'FROM c)SELECT PRINTF('%d%s on the wall%d%sTake one down, pass it around%d%s on the wall',a.x,a.s,a.x,a.s,a.x-1,b.s)FROM a JOIN a AS b ON b.x=a.x-1;```
gollark: It is done.
gollark: I'll go swap out the tables and variables for smaller ones later™.
gollark: This is an EXTREMELY reasonable way to do conditionals, lyric lυ.
gollark: ```sqlWITH RECURSIVE counter(x) AS (VALUES(10) UNION ALL SELECT x-1 FROM counter WHERE x>1), bottle(x, str) AS (SELECT x, SUBSTR(' bottles', 1, (x <> 1) + 7) || ' of beer' FROM counter)SELECT PRINTF('%d%s on the wall%d%sTake one down, pass it around%d%s on the wall', x, str, x, str, x - 1, (SELECT str FROM bottle WHERE x = x - 1)) FROM bottle;```

References
  1. Like the Federal Reserve, it contains both private and public elements.
  2. Who is Fannie Mae Today?, fanniemae.com
  3. 'Arrogant and unethical': Fannie Mae to pay $400 million penalty, Chicago Tribune
  4. U.S. seizes Fannie and Freddie, CNN
  5. NINJAs sadly having nothing to do with mutant turtles.
This article is issued from Rationalwiki. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.