Which entity is known for securitizing mortgages made by primary mortgage lenders?

The correct choice is Fannie Mae, which stands for the Federal National Mortgage Association. Fannie Mae plays a crucial role in the mortgage market by purchasing loans from primary lenders, such as banks and credit unions. After acquiring these loans, Fannie Mae groups them into pools and then securitizes them, creating mortgage-backed securities (MBS). These MBS are sold to investors, providing liquidity to the mortgage market and enabling lenders to offer more loans to homebuyers.

This process contributes to the stability and availability of housing finance, as it allows lenders to replenish their funds and continue issuing new mortgages. Fannie Mae’s involvement in the securitization process helps lower the cost of borrowing for consumers and increases access to home financing options.

The other entities listed serve different functions. The FDIC, for instance, insures deposits at banks, HUD focuses on urban development and housing programs, and the IRS administers tax laws rather than being involved in mortgage financing or securitization.