Which organization is best known for purchasing and securitizing residential mortgages?

The Federal National Mortgage Association, commonly known as Fannie Mae, is the organization that is best known for purchasing and securitizing residential mortgages. It plays a crucial role in the secondary mortgage market by buying loans from lenders, thereby providing them with the necessary funds to issue more mortgages. This process helps ensure that there is liquidity in the market, allowing more individuals to access home financing.

Fannie Mae pools these loans and then sells them as mortgage-backed securities (MBS) to investors. This securitization process not only spreads the risk associated with mortgages but also lowers borrowing costs for consumers by providing a consistent source of capital for lenders.

In contrast, other organizations listed have different roles. The FHA primarily provides mortgage insurance to protect lenders against borrower defaults. Ginnie Mae, while also involved in the secondary market, focuses on backing securities made up of government-insured loans rather than directly purchasing and securitizing residential mortgages. The Federal Reserve Bank's role is centered around monetary policy and regulation, rather than the direct involvement in the mortgage market's secondary activities.