Who is Fannie Mae?

The Federal National Mortgage Association (Fannie Mae) is the nation’s largest mortgage buyer and a financial juggernaut that affects the lives of tens of millions of home buyers. It was taken over by the federal government on Sept. 8, 2008, along with Freddie Mac, as the two mortgage giants struggled with deep losses and investors lost confidence in the pair.

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The federal government created Fannie and Freddie to increase the availability of loans. Largely because of investors’ belief in an implicit government guarantee, these so-called government sponsored entities were able to lower the cost of millions of mortgages. But during the housing boom, they misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.
In May 2012, Fannie Mae announced that it made a profit in the first quarter and that it did not need additional bailout money — a first since the federal government took it over in fall 2008. The company reported quarterly net income of $2.7 billion, up from a $6.5 billion loss in the first quarter of 2011.

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A slowdown in the decline of home prices and in the number of homes entering serious delinquency allowed the company to eke out a profit after paying its dividend to the Treasury. Fannie Mae also said losses on its portfolio of home mortgages had probably peaked and that it expected better profits in the future, a sign that the worst might be over for the battered American housing market.
Fannie received about $116 billion from the Treasury over the previous three and a half years and paid back about $23 billion in dividends. Its brother institution, Freddie Mac, received about $72 billion and paid back about $18 billion.