• Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as "FannieMae," issues discount notes, bonds and mortgage pass-through securities.

• Is the Federal National Mortgage Association or Fannie Mae.

 Embedded terms in definition
Federal national mortgage association
T note
 Referenced Terms
 Federal national mortgage association: Abbreviated Fnma, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest.Federal National Mortgage Association is one of the three Government Sponsored Agencies.

 Pass through: A mortgage-backed security on which payment of interest and principal on the underlying mortgages are passed through to the security holder by an agent.Is the term used to represent a generic class of securitized mortgage notes. Typically, these mortgage backed securities are issued by agencies of the United States, such as Fnma or FHLMC. The underlying collateral is serviced by banks or mortgage companies. The revenue generated by the servicing is considered fee income. The principal and interest payments go to the investors. Two attractive features of these instruments is that the securitization process lowers the regulatory capital requirements for the originating then holding investor. Secondly, the securitization tends to improve the liquidity of the asset.

 Private pass throughs: Are mortgage backed issues securitized by non-agency financial institutions. This compares to Fnma, Freddie Mac and GNMA securities.

 Structured notes: Notes issued by Government Sponsored Enterprises (FHLB, Fnma, SLMA, etc.) and Corporations that have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve.

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