Final answer:
Fannie Mae is the agency that buys residential conventional mortgage loans.
Step-by-step explanation:
The agency that buys residential conventional mortgage loans is the Federal National Mortgage Association, commonly known as Fannie Mae.
Fannie Mae is a government-sponsored enterprise (GSE) that was established in 1938. Its primary purpose is to provide stability and liquidity to the secondary mortgage market by purchasing mortgage loans from lenders and then selling them as mortgage-backed securities to investors.
By doing this, Fannie Mae encourages lenders to continue making mortgage loans to borrowers, thereby increasing homeownership opportunities.