Fannie Mae

1. A private, shareholder-owned company created by Congress in 1938 to bolster the housing industry during the depression. Fannie Mae facilitates homeownership by adding liquidity to the mortgage market when it purchases loans from lenders who use the funds received to make additional loans. Fannie Mae finances mortgage purchases by issuing its own bonds or by selling mortgages it already owns to financial institutions. Formerly called Federal National Mortgage Association. See also quasi-public corporation.
2. A security issued by this company that is backed by insured and conventional mortgages. Monthly returns to holders of Fannie Mae securities consist of interest and principal payments made by homeowners on their mortgages.