In 1968, FNMA was divided into which two organizations?

The correct answer is that FNMA, commonly known as Fannie Mae, was divided into two organizations: Fannie Mae and Ginnie Mae.

To understand this division, it is important to recognize the roles of these entities in the housing finance system. Fannie Mae, established to expand the secondary mortgage market by securitizing mortgages, allows lenders to reinvest their assets into more lending. This helps to provide more mortgage availability for homebuyers.

Ginnie Mae, on the other hand, was created to promote home ownership and to facilitate mortgage lending through the issuance of mortgage-backed securities. It guarantees the timely payment of principal and interest on these securities, which primarily consist of government-insured or guaranteed loans.

The breakup that resulted in Fannie Mae and Ginnie Mae allowed for a clearer delineation of responsibilities within the mortgage market. While Fannie Mae continued to focus on conventional mortgages, Ginnie Mae's emphasis was on loans backed by federally insured programs, like those from the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

The other options do not correctly reflect the historical separation of FNMA. HUD (Housing and Urban Development) is a federal department that oversees various housing issues but is not a direct entity formed from