What is FNMA's primary purpose in the secondary market?

The primary purpose of FNMA, commonly known as Fannie Mae, in the secondary market is indeed to provide a source of funds for lenders. Fannie Mae buys mortgages from approved lenders, which allows these lenders to replenish their funds and continue offering more loans to homebuyers. This process enhances liquidity in the mortgage market and helps ensure that lenders have adequate capital to meet the demand for home financing.

By purchasing mortgages, Fannie Mae helps to stabilize the housing market, as lenders are encouraged to issue more loans when they know they can sell them in the secondary market. This activity ultimately supports the availability of affordable housing by making it easier for individuals and families to secure home loans.

The other options involve roles that are not aligned with Fannie Mae’s primary function. For instance, Fannie Mae does not regulate mortgage interest rates; rather, it operates within the constraints of the market. Additionally, while it plays a role in the overall risk management of the mortgage market, it does not insulate borrowers from default directly. Lastly, Fannie Mae does not lend directly to homebuyers; it facilitates the lending process by working with mortgage lenders.