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Fannie Mae Essay

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Company History The Federal National Mortgage Association (FNMA) also known as Fannie Mae was created in 1938 as part of a Grand Depression deal. Fannie Mae is a Government-Sponsored Enterprise (GSE) company that offers financial services to low-class and middle-class income individuals. Serves the secondary market by providing a diversified portfolio of mortgages to prospect investors. Even though the company is subsidized by the government it is also part of the S&P 500 list as a shareholder owned. Through the years FNMA has gained recognition as one of the two largest mortgage companies not only in the U.S. but also in the world. FNMA was created with the purpose of facilitating housing for U.S. citizens as well as stimulating the construction …show more content…

Vision “Our vision is to America’s most valued housing partner and to provide liquidity, access to credit and affordability in all U.S. housing markets at all times, while effectively managing and reducing risk to our business, taxpayers, and the housing finance system”. Size and Scope The following is an overview of Fannie Mae as a whole: Customers: Fannie Mae principal customers are lenders that operate on primary mortgage markets. Like, mortgage banking companies, savings banks, credit union, commercial banks, community banks, savings and loan institutions, states and local financing agencies. These lenders originated the mortgages on the primary market, then Fannie Mae and Freddie Mac buys back these mortgage and sell these mortgages portfolios back to investors (local, and foreign) in the secondary …show more content…

This is a huge opportunity which is the combination of private and government backing. Also, FNMA and combination with Freddie Mac control about 90% of the nations secondary mortgage market with gave the company a strong outlook. Another strength FNAM has is the strong relationships with primary market lenders with give the company a front door step when it comes to investment opportunities. Weaknesses Some of the weaknesses faced by FNMA are the dividend policy which are detrimental to the company’s financial health. Also, FNMA has an unsustainable high capital which was affected through the recent recession in 2008 which left extreme losses. Value

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