Farmer Mac – Federal Agricultural Mortgage Corporation – (FAMC)

Definition

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 in agricultural loans such as mortgages 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. It is based in Washington, D.C.


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Farmer Mac – Federal Agricultural Mortgage Corporation – (FAMC)

What is ‘Farmer Mac – Federal Agricultural Mortgage Corporation – FAMC’

A publicly traded, shareholder-owned corporation that was federally chartered by an act of Congress in 1988. Farmer Mac’s mission is to establish a secondary market for agricultural real estate and rural housing mortgage loans, as well as to increase the availability of long-term credit at stable interest rates for American farmers, ranchers and rural homeowners.

To fulfill its mission, Farmer Mac purchases newly originated and seasoned agricultural loans from lenders, issues long-term standby commitments to purchase agricultural mortgage loans, exchanges loans for mortgage-backed securities through a swap program, and purchases and guarantees mortgage bonds backed by eligible agricultural mortgage loans.

Explaining ‘Farmer Mac – Federal Agricultural Mortgage Corporation – FAMC’

Farmer Mac’s programs and mission are very similar to Fannie Mae’s and Freddie Mac’s programs and missions for traditional residential mortgages. Farmer Macs was established to provide a liquid secondary market for agricultural mortgages, thereby lowering interest rates and providing a stable flow of funds to agricultural borrowers. This is similar to how Fannie Mae and Freddie Mac were established to provide similar benefits to the residential mortgage market.

Further Reading

  • Which banks will participate in Farmer Mac? – www.cabdirect.org [PDF]
  • Financial markets and agricultural credit at a time of uncertainty – www.jstor.org [PDF]
  • Competitive pricing of farmer Mac's mortgage-backed securities and its future viability: A contingent claims analysis approach – academic.oup.com [PDF]