What is the name of the Government Sponsored Enterprise that buys and sells residential mortgages?

The correct answer is the Federal National Mortgage Association, commonly known as Fannie Mae. Fannie Mae is a Government Sponsored Enterprise (GSE) that plays a crucial role in the secondary mortgage market by purchasing residential mortgages from lenders. This process increases the availability of funds that lenders can use to offer new home loans, thus supporting home ownership across the country.

Fannie Mae's primary function is to provide liquidity, stability, and affordability to the mortgage market. By buying loans from banks and other mortgage lenders, Fannie Mae helps ensure that mortgage money is always available, which in turn helps keep borrowing costs low for homeowners.

Understanding Fannie Mae's role is essential for a mortgage loan officer, as it demonstrates the interconnectedness of the mortgage market and how GSEs contribute to the housing finance system.