The Fannie Mae bank was established in 1964. The main purpose of the bank is to help low, moderate and middle - income families to buy new homes. Fannie Mae bank is formed by the United States Federal Government the Federal National Mortgage Association. This bank buys mortgages on the secondary market, pools them and sells them as mortgage-backed securities to investors in open market. The advantage of using mortgage market is that it replenish the supply of lendable money for mortgages and makes that money to be available for new home purchases. The bank's plans are in such a way that the first time home buyers and the buyers who have lower incomes are benefited. The programs designed by the bank are helpful for most of the people across America. Fannie Mae is the second largest corporation in terms of assets and stands first in the field of financing for home mortgages.

The services provided by the Fannie Mae bank are carried in two ways namely

• Protofolio investment.
• Credit guaranty.

Asset purchases and funding activities come under the Protofolio investment and guaranteeing the credit performance of single or multi-family mortgage loan for a fee comes under Credit guaranty. The bank is also having Internet services which is available round the clock to its customers. Home loans to personal mortgages and saving accounts to investment services and many other services are available through Internet. The bank has raised its operating capital from issuance of common stock, from the sale of notes and debentures, and from the guaranty fees it charges mortgage lenders. The bank maintains a Mortgage-Backed Security for the lenders who delivers a pool of mortgage loans to the bank, in turn the lender can hold the mortgage security or sell to investors.

The Fannie Mae buys mortgages which are federally insured or guaranteed mortgage loans i.e the loans with an original principal amount under a Conforming Loan limit. The bank provides same facilities as the Freddie Mac which is its major competitor even though the bank buys its mortgages in the secondary market. The bank is created as Federal National Mortgage Association in 1938 and it became an investor-owned corporation in 1968. The bank issued the first stripped mortgage-backed security, this is a mortgage security with an unequal distribution of principal and interest in a single mortgage pool.