Final answer:
The correct statement about the Federal National Mortgage Association (FNMA) is that it purchases certain mortgages originated by lending institutions to support the secondary mortgage market. So, the correct answer is option A.
Step-by-step explanation:
A correct statement about the Federal National Mortgage Association (FNMA), which is also known as Fannie Mae, is that it purchases certain mortgages originated by lending institutions. This entity is a government-sponsored enterprise (GSE) that was established to expand the secondary mortgage market by securitizing mortgages, thereby allowing lenders to reinvest their assets into more lending and increasing the number of lenders in the mortgage market.
The other options provided describe different entities or concepts: (B) would be applicable to the Federal Housing Administration (FHA), which insures mortgages; (C) is also incorrect as FNMA doesn't provide guarantees to lenders on certain mortgages, that is more aligned with the role of the FHA or VA loans; (D) is the role of the Federal Reserve, which is the central bank of the United States and not affiliated with FNMA's operations.
So, the correct answer is option A.