Which type of loan is Fannie Mae not authorized to buy?

Which type of loan is Fannie Mae not authorized to buy?

• A. FHA
• B. VA
• C. Conventional
• D. FDIC

Answer: (D)

Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that primarily operates in the secondary mortgage market. It is authorized to purchase loans that meet certain guidelines established by the agency, including those categorized as FHA (Federal Housing Administration), VA (Department of Veterans Affairs), and conventional loans. The underlying reason why Fannie Mae is not authorized to buy FDIC (Federal Deposit Insurance Corporation) loans is that FDIC is an agency responsible for protecting depositors in American commercial banks and savings institutions. It does not originate or manage loans directly; instead, it insures deposits and oversees the safety and soundness of banks. Therefore, loans associated with FDIC do not fit within the purview or the operational framework of Fannie Mae, which focuses on mortgage products that it can securitize or sell in the secondary markets. Understanding the roles of Fannie Mae and the FDIC clarifies why FDIC loans are not bought by Fannie Mae, as their functions and objectives within the financial system are fundamentally different.

Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that primarily operates in the secondary mortgage market. It is authorized to purchase loans that meet certain guidelines established by the agency, including those categorized as FHA (Federal Housing Administration), VA (Department of Veterans Affairs), and conventional loans.

The underlying reason why Fannie Mae is not authorized to buy FDIC (Federal Deposit Insurance Corporation) loans is that FDIC is an agency responsible for protecting depositors in American commercial banks and savings institutions. It does not originate or manage loans directly; instead, it insures deposits and oversees the safety and soundness of banks. Therefore, loans associated with FDIC do not fit within the purview or the operational framework of Fannie Mae, which focuses on mortgage products that it can securitize or sell in the secondary markets.

Understanding the roles of Fannie Mae and the FDIC clarifies why FDIC loans are not bought by Fannie Mae, as their functions and objectives within the financial system are fundamentally different.