The Federal Agricultural Mortgage Corporation, also known as Farmer Mac, is a stockholder-owned, publicly traded company that was chartered by the United States federal government in 1988 to serve as a

secondary market The secondary market, also called the aftermarket and follow on public offering, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. The initial sale of ...

in agricultural loans such as

mortgages A mortgage loan or simply mortgage (), in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pur ...

for agricultural real estate and rural housing. The company purchases loans from agricultural lenders, and sells instruments backed by those loans. The company also works with the

United States Department of Agriculture The United States Department of Agriculture (USDA) is an executive department of the United States federal government that aims to meet the needs of commercial farming and livestock food production, promotes agricultural trade and producti ...

. It is based in

Washington, D.C. Washington, D.C., formally the District of Columbia and commonly known as Washington or D.C., is the capital city and federal district of the United States. The city is on the Potomac River, across from Virginia, and shares land borders with ...

History

It was created by the

Agricultural Credit Act of 1987 Agriculture encompasses crop and livestock production, aquaculture, and forestry for food and non-food products. Agriculture was a key factor in the rise of sedentary human civilization, whereby farming of domesticated species created food ...

() as a federally chartered, private corporation responsible for guaranteeing the timely repayment of principal and interest to investors in a new agricultural secondary market. The secondary market allows a lending institution to sell a qualified farm real estate loan to an agricultural mortgage marketing facility, or pooler, which packages these loans, and sells to investors securities that are backed by, or represent interests in, the pooled loans. Farmer Mac guarantees the timely repayment of principal and interest on these securities and, under authorities granted in 1995, can also serve as a loan pooler. The company was founded during a $4 billion bailout of the

Farm Credit System The Farm Credit System (FCS) in the United States is a nationwide network of borrower-owned lending institutions and specialized service organizations. The Farm Credit System provides more than $373 billion (as of 2022) in loans, leases, and relat ...

, hoping to provide an alternative source of credit to farmers following the models of

Fannie Mae The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New ...

and

Ginnie Mae The Government National Mortgage Association (GNMA), or Ginnie Mae, is a government-owned corporation of the United States Federal Government within the Department of Housing and Urban Development (HUD). It was founded in 1968 and works to exp ...

2008 financial crisis

In June 2008, during the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

, Farmer Mac had $47.2 million invested in

shares. Over the next few months, during the

Federal takeover of Fannie Mae and Freddie Mac In September 2008, the Federal Housing Finance Agency (FHFA) announced that it would take over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Both government-sponsored enter ...

, these investments lost about $44 million in value. The company also had significant investments in

Lehman Brothers Lehman Brothers Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...

. In response, the

bailed the company out by purchasing $60 million in Farmer Mac stock, and

Zions Bancorporation Zions Bancorporation is an American national bank headquartered in Salt Lake City, Utah. It operates as a national bank rather than as a bank holding company and does business under the following seven brands: Zions Bank, Amegy Bank of Texa ...

of Salt Lake City purchased another $5 million in stock.

References

External links

Farmer Mac home page
{{Authority control Companies listed on the New York Stock Exchange Companies based in Washington, D.C. Agricultural organizations based in the United States United States government-sponsored enterprises Mortgage industry of the United States Mortgage industry companies of the United States

History

2008 financial crisis

See also

References

External links