A leading government-sponsored enterprise that buys loans from mortgage banks, and then either holds or sells those loans.
Along with Freddie Mac, Fannie Mae is a leading government-sponsored enterprise (GSE), or “agency,” that buys loans from mortgage banks and either holds them in its portfolios or packages them into “Mortgage-Backed Securities” for sale.
Both Fannie and Freddie were created by Congress as ostensibly private companies to provide liquidity to the mortgage market in support of homeownership for Americans. They are now effectively controlled by the U.S. government and they dominate the mortgage market. These agencies purchase mortgages that abide by strict criteria. They will only lend up to the conventional loan limits per county, which are set annually.