What is the role of FNMA in the mortgage market?

The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, plays a crucial role in the mortgage market by buying and selling mortgage-backed securities. This function helps provide liquidity, stability, and affordability in the housing market. When Fannie Mae purchases mortgages from lenders, it enables those lenders to free up capital, which they can then use to issue more loans. This process ultimately supports the flow of mortgage credit to consumers, making homeownership more accessible.

In the context of the options presented, buying and selling mortgage-backed securities is essential for ensuring an efficient market where mortgages can be easily traded. This activity stabilizes mortgage interest rates and promotes the availability of mortgage loans, which is vital for fostering a healthy housing market.

The other options do not accurately reflect FNMA's role. For instance, while Fannie Mae does not lend money directly to consumers, such lending is typically the role of banks or mortgage lenders. Additionally, while FNMA does not provide insurance for mortgage loans — that function is served by entities like the Federal Housing Administration (FHA) or private mortgage insurance companies — it works with various stakeholders in the market. Finally, Fannie Mae does not focus on providing financial education to consumers, which is typically handled by non