Fannie Mae to buy loans from FHLB of Chicago

Fannie Mae will purchase 15- and 30-year fixed-rate mortgages channeled through the bank's Mortgage Partnership Finance Program, which provides affordable mortgages through the bank's member institutions.

The new partnership helps Fannie Mae expand its purchasing options in an effort to stabilizing the housing and mortgage markets. Fannie Mae and fellow mortgage giant Freddie Mac were taken over by the government amid the ongoing credit crisis. As part of that takeover, the government said it would use the mortgages giants--which combined own or guarantee nearly half the nation's mortgage debt--to try and stabilize the mortgage market.

Federal home loan banks are whole banks that providing funding to member banks to originate mortgages. The Federal Home Loan Bank of Chicago has about $93 billion in assets.

Shares of Fannie Mae were fell 1 cent to $1.28 in early afternoon trading.