OTC: FNMA
Key Data Points
Fannie Mae buys mortgages from lenders that conform to its specifications, providing them with cash to fund more loans. It either holds the mortgages in its investment portfolio or packages them together into mortgage-backed securities (MBS) that it sells to investors.
Mortgage-Backed Securities (MBS)
Congress created Fannie Mae during the Great Depression. It would go on to become a private shareholder-owned company in 1968. However, it ran into trouble during the Great Recession.
As a result, the federal government stepped back in and placed it under the conservatorship of the Federal Housing Finance Agency (FHFA) in 2008. While that government intervention led the New York Stock Exchange to remove Fannie Mae's listing, it's still a publicly traded company on the OTC markets. Here's everything you need to know about investing in Fannie Mae.
How to buy Fannie Mae stock
Since Fannie Mae is still a publicly traded company, anyone can buy shares of the mortgage financier. However, because it no longer trades on a major stock market exchange, you'd need to have an account with a broker or trading platform that allows trading shares listed on the OTC markets.
For those interested in becoming a shareholder, this step-by-step guide will show you how to invest in stocks:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Fannie Mae?
Fannie Mae is still a publicly traded company despite its troubles during the financial crisis. However, it remains under the conservatorship of the FHFA. So, while you can invest in the company, it is essential to understand the ramifications of its relationship with the government.
The FHFA has the power over the company's management, board, and shareholders. While Fannie Mae operates as a business, the FHFA has the ultimate authority over its operations.
The U.S. Treasury also holds a senior preferred stock investment in Fannie Mae, which granted it warrants to buy almost 80% of its outstanding shares for a nominal price. Because of this arrangement, most of the value the company creates by providing liquidity to the mortgage market accrues to the government in exchange for its continued support.
Given these factors, Fannie Mae is unlikely to be an appealing investment. It probably won't be a compelling investment opportunity until it is in a position where the FHFA can end its conservatorship of the company. There are many better ways to invest in real estate these days than Fannie Mae.
Is Fannie Mae profitable?
Fannie Mae lost billions of dollars on its investment portfolios and MBS guarantees during the financial crisis, forcing the government to step in to provide additional financial support. The company has steadily climbed out of that big hole, returning to profitability in 2012. By 2014, it repaid all the money it received and has since poured billions of dollars into the U.S. Treasury.
The company has remained profitable over the past decade. It reported $3.7 billion of net income in the first quarter of 2025. That was down from $4.1 billion in the fourth quarter of 2024 and from $4.3 billion in the first quarter of 2024. Fannie Mae's growing income increased its net worth to $98.3 billion, a significant rise from $47.4 billion in 2021.
The company's strong profitability enabled it to continue supporting the mortgage market. It provided $76 billion of liquidity to the mortgage market in the first quarter of 2025 by purchasing and refinancing loans backed by single-family homes and multifamily rental properties.
Does Fannie Mae pay a dividend?
Fannie Mae no longer pays quarterly dividends to its investors. The company suspended its dividend in 2008 when the government put it under the conservatorship of the FHFA.
However, the company makes preferred dividend payments to the U.S. government, which has a senior preferred stock position in the company. It retains all the earnings that it doesn't pay to the government to provide additional liquidity to the mortgage market.
ETFs with exposure to Fannie Mae
While Fannie Mae is a publicly traded company, you can't passively invest in the mortgage financier through exchange-traded funds (ETFs) since it's not a widely held stock among ETFs. However, you can use ETFs to invest in the mortgage market and MBS issued by the company. Here are a few mortgage ETFs to consider:
- iShares MBS ETF (NYSEMKT:MBB): This fund provides investors with exposure to MBS issued by Fannie Mae, Freddie Mac, and Ginnie Mae. It held more than 11,000 MBS investments in mid-2025. The ETF enables investors to generate income from MBS backed by government agencies. It had an income yield of more than 4% and a 0.04% net ETF expense ratio.
- Vanguard Mortgage-Backed Securities ETF (NYSEMKT:VMBS): The fund provides diversified exposure to MBS issued by Ginnie Mae, Fannie Mae, and Freddie Mac. It provided investors with income through more than 1,400 bonds and had an average income yield of more than 4% in the past year. The ETF had a 0.03% expense ratio.
- iShares Mortgage Real Estate ETF (NYSEMKT:REM): The ETF aims to track the investment results of an index comprised of real estate investment trusts (REITs) that hold residential and commercial mortgages. These mortgage REITs use leverage to buy securities backed by Fannie Mae, other agencies, and those tied to commercial mortgages. The fund held 33 of these real estate stocks in mid-2025 and had a dividend yield approaching 10% over the past year. The fund had a 0.48% expense ratio.
Will Fannie Mae stock split?:
Fannie Mae didn't have an upcoming stock split as of mid-2025. Given its low share price (around $6.50 a share in mid-2025), a reverse stock split is more likely in the company's future. That probably wouldn't happen until it's no longer under the conservatorship of the Federal Housing Finance Agency.
Related investing topics
The bottom line on Fannie Mae
Fannie Mae has provided liquidity to the housing market since the Great Depression. Although the company lost billions of dollars during the Great Recession, it has recovered thanks to the government's support, which placed it under the conservatorship of the FHFA, where it remains today.
However, even though it's still a publicly traded company and very profitable, investors have better options than Fannie Mae since it's a government-controlled entity. Those who really want to invest in the mortgage finance industry could consider an ETF focused on securities backed by the company instead.
FAQ
About the Author
