Money
Fannie Mae

How does Fannie Mae make money? On the left, They issue bonds on Wall Street and have to pay interest on that money. With the money they buy mortgages from banks and collect the interest on the mortgage. The difference between the two interest rates is Fannie's profit.

On the right, they guarantee mortgages. The fee they get by guaranteeing the mortgage (minus the cost of any defaults) is their profit.