Fnma Model

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The Federal National Mortgage Association: An Entrepreneurial Agency The Federal National Mortgage Association (FNMA) functions as an entrepreneurial agency. According to Wilson, an agency is entrepreneurial when the costs are heavily concentrated in some industry, profession, or locality, and the benefits are spread over many people. This type of agency faces hostile interest groups that bear the high per-capita costs, while its supporters are less organized because of the low per-capita benefits. FNMA’s costs are concentrated in the government and its benefits are spread over millions of homeowners and mortgage lenders. The key interest groups hostile to this agency are the National Taxpayers Union and the Mortgage Bankers Association; its …show more content…
Aspiring homeowners get help buying a home, and the increase in home buying stimulates the economy and creates construction jobs. Mortgage companies benefit when the FNMA buys their mortgages and funds the loans keeping mortgage rates and other fees to a minimum. These benefits are diffused across all homeowners, so they have a low per-capita value. The Costs of FNMA are heavily concentrated in the United States Government seen by the financial crisis resulting in the conservatorship. The government gave FNMA approximately $3 billion dollars to prevent bankruptcy. This is a great deal of money for a government that, at the time, was in a financial crisis.

As a government agency, FNMA is at risk of losing public support. If this occurs, FNMA will get bombarded with opposition and find few allies to lobby on their behalf. This requires a monitoring of public support to ensure that the groups will continue to lobby for FNMA. The government bailout of FNMA in 2008 caused American taxpayers to pay over $200 billion. 7 According to the National Taxpayers Union (NTU), the bailout money is broadly distributed among all American taxpayer’s including home owners. The low per-capita costs of the bailout money are diffused on American taxpayers and homeowners.

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