Which organization is responsible for stabilizing the housing market by providing mortgage guarantees?

Fannie Mae, formally known as the Federal National Mortgage Association, plays a crucial role in stabilizing the housing market by providing mortgage guarantees. Its primary function is to enhance the availability of mortgage credit in the U.S. housing market, ultimately promoting home ownership and affordable housing.

By guaranteeing the timely payment of principal and interest on mortgages that are issued by lenders, Fannie Mae provides assurance to investors that their investment in mortgage-backed securities is secure. This backing encourages lenders to provide more loans, thereby increasing the flow of capital into the housing market. As a result, consumers have easier access to home financing, helping to stabilize home prices and maintain liquidity in mortgage markets during economic fluctuations.

Other organizations mentioned do have important roles in the housing finance system, but they serve different purposes. Freddie Mac, similar to Fannie Mae, also works to provide liquidity and stability to the mortgage market. Ginnie Mae guarantees mortgage-backed securities that are backed by government-insured or guaranteed loans, while the Federal Reserve Bank primarily focuses on monetary policy and overall economic stability rather than directly influencing the housing market through mortgage guarantees.