Fannie Mae's Human Resource Management Policies
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Case Details:
Case Code : HROB038
Case Length : 16 Pages
Period : 1999 - 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Federal National Mortgage Association
Industry : Mortgage Financing
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
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Fannie Mae's history dates back to the late-1930s. The Federal government's
decision to help American's own homes, and the unwillingness of private lenders
to ensure a reliable supply of mortgage credit across the nation led to the
creation of Fannie Mae. Fannie Mae was established in February 1938 to
facilitate the constant flow of mortgage money by creating a secondary market
for the same.4
Initially, the company was only authorized to buy mortgages that were insured by
the Federal Housing Administration (FHA). Later, in 1994, it was also allowed to
buy loans guaranteed by the Veteran's Administration.5
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By the Charter Act of 1954, the government made Fannie Mae a mixed-ownership
company, owned partly by private shareholders. Under this Act, though, the
company still remained under the direct control of the government, the Act
removed government backing for the borrowings used to fund the secondary
market operations and stipulated that the company be exempt from all local
taxes (except property taxes).
In 1968, the Charter Act of 1954 was amended and Fannie Mae was established
as a government-sponsored private, shareholder-owned company. The amended
Act authorized the company to issue mortgage-backed securities (MBS). It
also allowed Fannie Mae to buy mortgages beyond traditional government loan
limits, thus allowing it to reach to a broader cross-section of Americans.
The company was freed from the direct control of the government. But to
ensure that Fannie Mae adhered to its public purpose, the Act required it to
operate under a Congressional charter.
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Fannie Mae was listed on the New York and Pacific Stock Exchanges in
1970. In 1972, the company made its first conventional mortgage6
purchase, which, according to analysts, marked the beginning of a
national secondary market for conventional mortgages. In 1981, David
O. Maxwell (Maxwell) became the Chairman and CEO of Fannie Mae.
Under Maxwell, the company soon entered many new business segments
of the mortgage market such as adjustable-rate mortgages (ARMs),
second mortgages and MBS. In 1984, Fannie Mae also entered foreign
capital markets. |
During the early 1990s, the company intensified its efforts
to offer housing opportunity to people from all communities in the US.
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