Common term for the Federal National Mortgage Association (FNMA), a federal Government Sponsored Enterprise (GSE) program. Fannie Mae was created by the federal government in 1938 to create a secondary market for mortgages by buying mortgages from lenders and was later converted into a publicly traded corporation. Fannie Mae and Freddie Mac buy mortgage loans from originators and then securitize them to sell to investors as a certain type of mortgage-backed security (MBS) called agency MBS. Because Fannie Mae and Freddie Mac provide a guaranty of the mortgages they securitize, agency MBS are generally regarded as a more secure investment than other types of MBS. However, agency MBS are not explicitly guaranteed by the federal government. Fannie Mae also continues to purchase MBS issued by other institutions.