Which type of loans is Fannie Mae least likely to purchase?

Which type of loans is Fannie Mae least likely to purchase?

• A. Conventional
• B. FHA-insured
• C. Subprime
• D. VA-Guaranteed

Answer: (C)

Fannie Mae is a government-sponsored enterprise that primarily focuses on buying and securitizing conventional loans, as well as loans insured by FHA and guaranteed by the VA. These types of loans meet specific underwriting standards and risk profiles set by Fannie Mae, facilitating liquidity in the mortgage market. Subprime loans, on the other hand, are designed for borrowers with poor credit histories or those who do not meet the conventional loan criteria. These loans carry higher risks and are typically not compliant with the underwriting standards that Fannie Mae upholds. As a result, Fannie Mae is much less likely to purchase subprime loans, prioritizing safer investment options that are more aligned with their mission to support stable, affordable housing finance.

Fannie Mae is a government-sponsored enterprise that primarily focuses on buying and securitizing conventional loans, as well as loans insured by FHA and guaranteed by the VA. These types of loans meet specific underwriting standards and risk profiles set by Fannie Mae, facilitating liquidity in the mortgage market.

Subprime loans, on the other hand, are designed for borrowers with poor credit histories or those who do not meet the conventional loan criteria. These loans carry higher risks and are typically not compliant with the underwriting standards that Fannie Mae upholds. As a result, Fannie Mae is much less likely to purchase subprime loans, prioritizing safer investment options that are more aligned with their mission to support stable, affordable housing finance.