Federal National Mortgage

The Federal National Mortgage Association. Source Fortune, April 27, 1998, p. F-1. 

Corporation, and Federal National Mortgage Association. In most cases, they are exempt from state and local taxes. 

Federal National Mortgage Association (FNMA or Fannie Mae) A con-gressionally chartered corporation that buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market. Monthly principal and interest payments are guaranteed by FNMA but not by the U.S. government. Also called Fannie Mae. 

The U.S. market also includes adjustable-rate mortgages, or ARMs, which reset interest payments at specified intervals to a specified shortterm interest rate index. The interval between resets can be a month, six months, a year, or longer. The interest rate is usually set at a spread over the reference rate, which can be market-determined—the prime rate, for instance—or calculated based on the funding costs for U.S. savings and loan institutions, or thrifts, as indicated by one of the thrift indexes. The two most commonly consulted thrift indexes are the Eleventh Federal Home Loan Bank Board District Cost of Funds Index, or COFI, and the National Cost of Funds Index. 

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