The Federal National Mortgage Association, also known as Fannie Mae and FNMA, is a government-sponsored arrangement under which the government creates mortgages for mid-to-low income earners. While FNMA doesn’t provide mortgages itself, it does back mortgages that are provided by lenders, and regulate mortgages that are given to these otherwise sub-prime borrowers.
The FNMA was created in the 1930s as a way to encourage homeownership among those who wouldn’t otherwise qualify. Once mortgages are created, they are purchased and guaranteed, on a secondary market. During the housing crash in 2008, FNMA was highly involved. FNMA was taken over into conservatorship at the time, so the government could ensure the strength of the program.
Since then, the program has remained as a useful way for people to get a mortgage for a home that they intend to occupy. There are a number of FNMA programs, such as the FNMA HomeReady program, and the 3% Down Payment program.