New Issue Fannie Mae Bonds

I am interested in investing in new issue fannie mae bonds, where can I find more information?

1 Answer

You can find information on new issue, Federal National Mortgage Association bonds, or more commonly known as Fannie Mae, on the Internet at, in the financial book section of your local bookstore, or contacting security dealers such as J.P. Morgan Securities Inc., Morgan Stanley & Co., Citigroup Global Markets Inc., Goldman, Sachs & Co., and Lehman Brothers Inc. just to name a few. Fannie Mae does not directly sell their bonds to investors. You can only buy Fannie Mae bonds through security dealers, and they are typically good resources for announcing when new issue Fannie Mae bonds are available for purchase.

The U. S. government started Fannie Mae in 1938 as a way to expand the availability of mortgage money to Americans who could not otherwise afford home ownership. In concert with the Federal Housing Administration (FHA), Fannie Mae created a secondary mortgage market for mortgage lenders to ensure an expanded money market resource for home loans. Fannie Mae became a private company in 1968, infused with private investment.

Fannie Mae sells secondary mortgages as bonds, that is, primary mortgages that have been purchased by Fannie Mae, to subsequent individual and/or institutional investors in denominations as low as $1000. These bonds are defined as being a part of a family of mortgage-backed securities, that is, securities that are collateral-backed, real estate mortgages from which regular payments of principal and interest are paid to the investor or holder of the bond. The investor or holder of the bond is actually loaning money to Fannie Mae in return for mortgage principal and interest payments paid to the investor.

Mortgage interest rates can go up or down depending on several economic factors. Hence, bond risk tied to interest-rate uncertainty can taint fixed interest-rate returns over the term of the mortgage loan. But there is historically less risk in bonds or income funds than in other types of securities like equity stocks.

The U.S. government guarantees some mortgage-backed securities such as the Government National Mortgage Association, more familiarly known as Ginnie Mae. However, the U. S. government does not outwardly guarantee new issue, Fannie Mae bonds like it does for Treasury issues, but Fannie Mae does benefit from the U. S. government's tacit backing of their mortgage-backed securities and can borrow money at lower rates. Hence, Fannie Mae's generally have a high credit rating.

You may need to mitigate your financial portfolio's risk by purchasing low risk, new issue, Fannie Mae bonds. Some mutual funds include mortgaged-backed securities such as Fannie Mae's as part of their portfolio. Once again, you can contact a securities dealer to find out not only the type of mutual funds that include Fannie Mae's but also determine the fund and bond ratings of the desired mutual fund and Fannie Mae's, respectively.

Historically, Fannie Mae's have proved to be a popular way of investing in mortgage-backed securties.

For more information on new issue, Fannie Mae bonds, the following Website links are provided for your convenience: