Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0037

Year : 2005

Industry : Banking, Insurance and Financial Services

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

Introduction: The FederalNationalMortgageAssociationwas created in 1938, by a congressional charter. It was set up to provide liquidity and support to mortgage lending institutions in the US primarymortgagemarket, thus helpingmore andmoreAmerican families realise their dream of owning a house. Operating exclusively in the secondary mortgage market, the Federal National Mortgage Association was privatized in 1968 and over the years came to be known as FannieMae and becameAmerica’s mortgage giant – the second largest financial institution in the US after Citigroup.Once a mortgage originates (i.e. funds are loaned to borrowers), the lenders (mortgage companies, savings and loans, commercial banks, credit unions and state and local housing finance agencies) have the choice of either holding the mortgage in their own portfolio or selling the mortgages to secondary market investors, such as Fannie Mae. The choice of holding the mortgages would exhaust their lending capacity soon.