The Federal National Mortgage Association which is also abbreviated as Fannie Mae is a stockholder-owned corporation which was chartered by the United States Congress in 1968 as a government sponsored enterprise (GSE). However this association was founded in 1938 during the great depression to meet the needs of millions who were rendered homeless.

• The primary aim of Fannie Mae is to securitize mortgages by purchasing them and making money available to home buyers. Fannie Mae and Freddie Mac (Federal Home Loan Mortgage Corporation) have owned or guaranteed almost half of the $12 trillion mortgage market. Founded in the Roosevelt era this entity was converted into a private shareholder owned corporation and Freddie Mac was introduced to compete with Fannie Mae.
• When Fannie Mae was converted into a private entity it no longer provided guarantee to government issued mortgages. Instead this responsibility was given to Government National Mortgage Association (Ginnie Mae). The purpose and existence of both Fannie Mae and Freddie Mac was to provide liquidity in the secondary mortgage market. However many people and investors have mistook these institutions as government backed.
• The fact that Fannie Mae is a shareholder-owned corporation makes it legally a private entity that makes profit. However it cannot be denied that the U.S government has lax regulations when it comes to Fannie Mae or Freddie Mac. It does not have to maintain a certain amount of capital to back mortgage backed securities. Furthermore Fannie Mae and Freddie Mac are exempt from the rule of the capital/asset ratio of greater than 3% which is the law for similar financial institutions.
• It has been explicitly stated by both Fannie Mae and Freddie Mac that they do not receive any funding from the government and their products are not backed by the government. This has been a perception of investors and people in general and has positively affected both the institutions finances and profits. However the paradox is that the value of shares of both the corporations plunged in July 2008 when there was news floating around that the U.S government was going to take over Fannie Mae and Freddie Mac in wake of the sub-prime mortgage crisis.
• In September 2008 the Federal Housing Finance Agency (FHFA) took conservatorship of Fannie Mae and Freddie Mac and dismissed its CEO and board of directors replacing them. This meant that the company didn’t suffer liquidation but sustained huge losses as the value of the stock greatly diminished. Furthermore there was a regulation in pace that allotted a ceiling to the amount that the Federal government can loan or commit to. This law was modified and the ceiling was raised to USD 10.7 trillion from a mere USD 800 billion.
• Fannie Mae was also in the news for the wrong reasons when accounting scandals worth millions were discovered. The then CEO of Fannie Mae and other officers faced numerous civil rights lawsuits. The purpose was to recoup the $115 million which were embezzled in the form of fat bonuses by the top management.
• There is also debate whether such corporations or entities should exist since the housing bubble and its subsequent collapse can be attributed to such doctored or “engineered” mortgages. Furthermore the political role of the Clinton and Carter administration in forcing Freddie Mac and Fannie Mae to forward loans to sub-prime borrowers has also been cited and criticized by many financial experts.

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