Investor Guide — Updated 2026
How to Invest in Fannie Mae
A step-by-step guide to buying Fannie Mae common and preferred stock. From someone who has been invested in GSE junior preferred shares since 2013 and has written 300+ articles about the conservatorship.
Why I Wrote This Guide
I have been invested in Fannie Mae and Freddie Mac junior preferred shares since 2013. I have written over 300 articles on SeekingAlpha about the conservatorship, published 8 books on the subject, and documented my positions and track record publicly. This guide is what I wish I had when I started.
This is not financial advice. I am telling you what I know from over a decade of deep involvement in this trade.
Step-by-Step: How to Buy Fannie Mae Stock
Follow these six steps to go from zero to holding GSE shares.
Understand What Fannie Mae Is
Fannie Mae (Federal National Mortgage Association) is a government-sponsored enterprise (GSE) that buys and guarantees mortgages. It was placed into conservatorship by FHFA in September 2008. Fannie Mae and its sibling Freddie Mac guarantee roughly half of all U.S. mortgages. They are profitable, well-capitalized, and many investors believe privatization is imminent.
Decide Between Common and Preferred Shares
Common shares (FNMA, FMCC) trade on the OTC market. Junior preferred shares (FNMAS, FMCKJ, FMCCS, FMCCJ, and dozens more) also trade OTC. Preferred shares have a fixed par value (typically $25 or $50), pay dividends when not in conservatorship, and have priority over common in liquidation. Common shares have unlimited upside but carry more risk in a recap scenario.
Open a Brokerage Account That Supports OTC Stocks
Not all brokers allow you to trade OTC securities. Interactive Brokers is the gold standard for serious GSE investors: low commissions, global access, and full OTC support. Fidelity and Charles Schwab also support OTC trading. Robinhood does NOT support most OTC stocks, so avoid it for GSE investing.
Research the Specific Ticker Symbols
There are over 30 GSE preferred share classes. Popular ones include FNMAS (Fannie Mae Series S, $25 par, 8.25% coupon), FMCKJ (Freddie Mac Series K, $25 par), FMCCS (Freddie Mac Series S), and FMCCJ (Freddie Mac Series J). Each has different par values, coupon rates, and trading volumes. Do your homework before choosing.
Place Your Order
OTC stocks trade differently from NYSE/NASDAQ listings. Use limit orders, not market orders. Spreads can be wide, especially on lower-volume preferred series. Consider the bid-ask spread before placing your trade. Start with a small position and add over time as you build conviction.
Monitor the Privatization Timeline
The key catalyst for GSE investors is the end of conservatorship. Follow FHFA actions, Treasury Department statements, Congressional hearings, and court rulings. The Third Amendment and Net Worth Sweep are central to understanding the legal backdrop. Stay informed through primary sources, not headlines.
Common Stock vs. Preferred Stock
Common (FNMA / FMCC)
- Unlimited upside if privatized
- No guaranteed par value
- 79.9% owned by Treasury (dilution risk)
- Higher volatility, higher risk
- More liquid, tighter spreads
Preferred (FNMAS, FMCKJ, etc.)
- Fixed par value ($25 or $50)
- Dividend coupons (6-8%+ at par)
- Priority over common in restructuring
- Lower volatility, more predictable outcome
- Deep dive on GSE preferreds
Best Brokers for OTC GSE Trading
Fidelity
Solid OTC support, no commissions on OTC stocks. Good customer service. A reliable alternative.
Charles Schwab
Supports OTC trading. Merged with TD Ameritrade. Decent platform, good research tools.
Key Risks to Understand
Government Action Risk
The Treasury and FHFA control the timeline. Political winds can shift. The Net Worth Sweep showed the government is willing to take aggressive action against shareholders.
Dilution Risk
Treasury holds warrants for 79.9% of common stock and senior preferred with a massive liquidation preference. Any recap plan must address these claims.
Liquidity Risk
Some preferred series trade very thin volume. Wide bid-ask spreads can mean significant slippage. Stick to higher-volume series.
Binary Outcome
This is largely an all-or-nothing trade. Either shareholders are treated fairly in privatization, or they are not. Position sizing matters enormously.
Frequently Asked Questions
Is Fannie Mae stock a good investment?
Fannie Mae is a speculative investment tied to the outcome of the conservatorship. If privatization happens and shareholders are treated fairly, preferred shares could return to par value ($25 or $50 per share). If the government wipes out shareholders, they could go to zero. This is a binary outcome investment that requires deep research and risk tolerance.
What is the difference between FNMA and FNMAS?
FNMA is Fannie Mae common stock. FNMAS is Fannie Mae Series S preferred stock with a $25 par value and 8.25% dividend coupon. Preferred shares have priority over common in any restructuring and have a defined par value, making them a different risk/reward profile than common shares.
Can I buy Fannie Mae stock on Robinhood?
Robinhood has limited OTC stock support. Most GSE preferred shares are not available on Robinhood. Interactive Brokers, Fidelity, and Charles Schwab all support OTC trading and are better choices for GSE investing.
When will Fannie Mae be privatized?
The timeline for privatization is uncertain and depends on government action. FHFA, the Treasury Department, and potentially Congress all play a role. Multiple administrations have discussed ending the conservatorship. Follow the latest developments on Glen Bradford's Fanniegate page for real-time analysis.
What happens to preferred stock if Fannie Mae is privatized?
In a privatization scenario, preferred shares would likely be converted or reinstated at or near par value, with back dividends potentially paid. The exact treatment depends on the recapitalization plan. Some proposals have suggested converting preferreds to common, while others preserve their original terms.
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