FNMA (Fannie Mae)

Question 1

What is Fannie Mae a nickname for?

Answer 1

Federal National Mortgage Association

Question 2

What is the purpose of Fannie Mae?

Answer 2

To create a secondary market for the purchase and sale of mortgages.

Question 3

Why do secondary markets exist?

Answer 3

Since the bank used their own funds to make the loan, they will eventually run out of money to loan, so they will sell the loan to the secondary market to replenish their money available to make more home loans.

Question 4

How does Fannie Mae get their loans?

Answer 4

Purchases pools of mortgages from lenders and resells them in the form of mortgage-backed and other securities to investors.

Question 5

What are mortgage-backed securities?

Answer 5

Bonds backed by payments on mortgage loans

Question 6

Are Fannie Mae securities guaranteed by the US government?

Answer 6

No

Question 7

Fannie Mae shares generally have BLANK relationship with interest rates.

Answer 7

Inverse
Stock typically increases when interest rates fall, and vice versa.