Short answer. Fannie Mae (Federal National Mortgage Association, FNMA) is a government-sponsored enterprise (GSE) that buys residential mortgages from lenders, packages them into bonds, and guarantees timely payment to investors. Founded in 1938, it has been in federal conservatorship since 2008.
Fannie Mae was created by President Franklin Roosevelt in 1938 as the Federal National Mortgage Association — a federal agency designed to inject liquidity into the Depression-era mortgage market. Its role and structure have evolved substantially over 87 years.
The pre-1968 federal agency
From 1938 to 1968, Fannie Mae was a wholly-owned federal agency. It bought FHA-insured and VA-guaranteed mortgages from lenders, providing the secondary-market liquidity that allowed local lenders to keep originating new loans.
The 1968 split
The Housing and Urban Development Act of 1968 split Fannie Mae into two entities: a privately-owned (but federally-chartered) "Fannie Mae" and a separate federal agency, "Ginnie Mae" (Government National Mortgage Association), which kept the federal-debt-backed segment. Fannie Mae's purpose became scaling secondary-market liquidity for conventional (non-FHA/VA) mortgages.
The 2008 conservatorship
By September 2008, Fannie Mae and Freddie Mac collectively guaranteed roughly $5 trillion in U.S. mortgages — equivalent to about half of all U.S. mortgage debt. Mounting subprime-related losses pushed both GSEs to insolvency, and the Federal Housing Finance Agency placed them in conservatorship on September 7, 2008. The Treasury injected $187 billion of capital; both have since returned to profitability and have repaid Treasury approximately $300B+ via dividends.
Today's role
Fannie Mae purchases approximately $400-600 billion in mortgages annually, depending on origination volume. It guarantees timely principal-and-interest payment to investors in Fannie Mae MBS. The 2025 conforming-loan limit (the maximum mortgage size Fannie can purchase) is $806,500 in standard areas and $1,209,750 in high-cost areas.
Sources
U.S. Census Bureau Survey of Construction; National Association of Realtors Existing Home Sales report; Freddie Mac Primary Mortgage Market Survey; National Bureau of Economic Research Business Cycle Dating Committee.