Which government-sponsored enterprise was created by Congress to purchase conforming mortgage loans and resell them in the secondary market?

Fannie Mae, also known as the Federal National Mortgage Association, was established by Congress in 1938 primarily to enhance the liquidity of mortgage loans and promote stability in the housing market. By purchasing conforming mortgage loans from lenders, Fannie Mae can consolidate these loans and then resell them as mortgage-backed securities in the secondary market. This process allows lenders to obtain more funds to issue additional mortgages, ultimately facilitating access to home financing for consumers.

In contrast, while Freddie Mac (the Federal Home Loan Mortgage Corporation) also operates to increase the supply of affordable housing by purchasing and securitizing mortgage loans, it was created later, in 1970. The Federal Home Loan Bank system focuses on supporting local banks and heavily contributing to mortgage lending but does not directly purchase conforming loans for resale. Ginnie Mae, on the other hand, does not buy loans itself but guarantees securities backed by government-insured or guaranteed loans, such as those from the FHA and VA, rather than conforming loans.