For the first thirty years following its inception, Fannie Mae held a monopoly over the secondary mortgage market. Fannie Mae created a liquid secondary mortgage market and thereby made it possible for banks and other loan originators to issue more housing loans, primarily by buying Federal Housing Administration (FHA) insured mortgages. Originally chartered as the National Mortgage Association of Washington, the organization's explicit purpose was to provide local banks with federal money to finance home loans in an attempt to raise levels of home ownership and the availability of affordable housing.

Congress in 1938 by amendments to the National Housing Act as part of Franklin Delano Roosevelt's New Deal. To address this, Fannie Mae was established by the U.S. This resulted in foreclosures in which nearly 25% of America's homeowners lost their homes to banks. By 1933, an estimated 20 to 25% of the nation's outstanding mortgage debt was in default. housing market as people lost their jobs and were unable to make payments. The Great Depression wrought havoc on the U.S. Historically, most housing loans in the early 1900s in the USA were short term mortgage loans with balloon payments. A view, from the southwest, of the Federal National Mortgage Association's (Fannie Mae's) Reston, Virginia facility.

Fannie mae foreclosures 2000