ABSTRACT
The rapid development of a variety of mortgage-backed securities has led to a radical transformation in real estate finance. By integrating the mortgage market into the traditional capital markets, these securities have broadened the financial base for home mortgages. During 1978, the $40 billion of mortgage-backed securities issued in this national market financed nearly one quarter of all home loan originations. The unique financing requirements brought about by widespread homeownership have caused a continuing evolution in mortgage lending practices. The search by mortgage companies for new investors took a new turn in the late 1960’s with the creation of the first publicly traded pass-through securities backed by pools of mortgages. The Federal National Mortgage Association (FNMA or “Fannie Mae”) was organized as a Government agency in 1938 to purchase Government-guaranteed mortgages. After its reorganization as a privately owned corporation in 1968, it began in 1971 to buy conventional mortgages.
