Which mortgage association mainly purchases mortgages from banks to free up capital?

Fannie Mae, or the Federal National Mortgage Association, primarily purchases mortgages from lenders, including banks, to facilitate liquidity in the mortgage market. By buying these mortgages, Fannie Mae helps lenders free up capital, allowing them to issue new loans. This process effectively increases the availability of funds for home buyers and contributes to a stable housing market.

Fannie Mae issues mortgage-backed securities, which are sold to investors, and this process allows the association to provide more funds to the mortgage market. Consequently, lenders can recycle their capital into new mortgage loans, supporting home ownership and the overall economy.

Other entities like Ginnie Mae and Freddie Mac also play roles in the mortgage market, but they have different specific functions and structures. Ginnie Mae primarily guarantees loans insured by government agencies, while Freddie Mac focuses on increasing the supply of mortgage funds specifically for conventional loans. The Federal Reserve is involved in broader monetary policy and economic stability rather than directly purchasing mortgages to free up capital for banks.