Loans, And Everything You Need To Know
Fannie Mae (officially the Federal National Mortgage Association or FNMA) is a government-sponsored company (GSE), that is, a listed company that operates according to a Congress congress, which serves to stimulate one’s own home and increases liquidity. of mortgage money by creating a secondary market. Fannie Mae, founded in 1938 during the Great Depression as part of the New Deal, offers its channels to increase the availability and affordability of home ownership for Americans with low, medium and average incomes.
As a secondary mortgage market participant, Fannie Mae does not come out of loans or provides mortgages to borrowers. Instead, the money is transferred to mortgage lenders (such as credit unions, local and national banks, savings and other financial institutions) through the purchase and guarantee of mortgages provided by these companies. In fact, it is one of the two largest buyers of secondary market mortgages: the other is his brother, the Federal Home Loan Mortgage Corporation, or Freddie Mac, who is also a government-sponsored company created by Congress.
By investing in the mortgage market, Fannie Mae creates more liquidity for lenders, such as banks, savings cents and credit associations, which in turn enable them to insure or finance more mortgages. The entity estimates that it has financed the market with $ 5 trillion since 2009, and finances around six million home purchases, 14 million refinancing and three million rental apartments. It is the largest financier or financier of 30-year fixed-rate mortgages in the US
Fannie Mae has been listed on the stock exchange since 1968. Until 2010 it traded on the New York Stock Exchange. It was canceled after the mortgage, housing and financial crisis after its shares plummeted under the minimum capital requirements imposed by the NYSE. It now trades without a prescription.
In the second half of 2008, Fannie Mae and Freddie Mac were taken over by the government through a conservatory of the Federal Housing Finance Committee. Both were saved for $ 187.4 billion, which saved them from collapsing. By 2014, Fannie Mae had repaid the government more than the amount received. (For related literature, see Fannie Mae and Freddie Mac Fallout analysis .)
In August 2012, the conditions for the dividend obligations of the Fannie Mae changed, so that the US Treasury claimed some profit at the end of each quarter and provided capital if there was a deficit. So although Fannie Mae earns money, the profit is transferred every quarter to government.
To ensure that a mortgage lender is eligible for support from Fannie Mae, he must agree not to apply unethical practices under subprime loans. Subprime loans, which have higher interest rates than prime rate loans, are offered to borrowers with a low credit rating, who are considered by the lender to be at greater risk.
The mortgages that Fannie Mae buys and guarantees must meet strict criteria. For example, the limit for a conventional single-family home loan in 2017 is $ 424,000 for most areas and $ 636,150 for expensive areas such as Hawaii and Alaska. The Federal Housing Finance Agency (FHFA) sets these limits (to see them for all areas, click here.)
After buying mortgages on the secondary market, Fannie Mae bundles them to form mortgage-backed securities (MBS). MBS are asset-backed securities that are covered by a mortgage or a pool of mortgages. The mortgage-backed securities of Fannie Mae are subsequently purchased by institutions such as insurance companies, pension funds and investment banks. It guarantees payments of principal and interest on its MBS.
Fannie Mae also has its own portfolio, wooMr. Barkisijk called a preserved portfolio, which invests in mortgage-backed securities of its own and other institutions. Fannie Mae issues debt, called agency debt, to keep his portfolio. (For related literature, see Fannie Mae, Freddie Mac and the 2008 credit crisis .)
To obtain a loan that is supported by Fannie Mae, you ‘I have to go through an approved lender. Along with the avoidance of sub-prime loans mentioned above, lenders must meet eligibility and acceptance criteria that guarantee the credit quality of financing.
Mortgages purchased and guaranteed by Fannie Mae are referred to as loans that conform. In general, conforming loans have lower interest rates than non-conforming or jumbo loans, which are generally not supported by Fannie Mae because they exceed the limits for the credit limit.
Apply for a Fannie Mae-backed mortgage
Once you have found a lender that is eligible to provide a Fannie Mae loan, you will be guided through the process of completing a uniform wooMr application. Barkisening. You will need to collect and provide financial information and documentation. This includes a record of employment and your gross income and statements to support it, such as a W-2 form or form 1099. You will also have to provide a total of your monthly debt obligations, such as credit cards, car payments, alimony and child benefit.
To be approved for a loan supported by Fannie Mae, it is preferable to have a front-end debt-to-income ratio (DTI) of no more than 28%. A front-end DTI determines how much of your gross income goes to housing costs. If your DTI is too high, you can make a larger prepayment, which lowers your monthly costs. Fannie Mae requires a minimum down payment of 5% for a fixed-rate mortgage, although 20% is usually ideal.
Home buyers must also meet minimum credit requirements to be eligible for Fannie Mae-backed mortgages. For a single-family home that is a principal residence, a FICO score of at least 620 for fixed-rate loans and 640 for variable-rate mortgages (ARMs) is required. Of course, the better – or higher – your FICO score, the more you are eligible for the lowest available interest rates.
After the mortgage destruction, Fannie Mae began to focus on credit changes. Loan adjustments change the conditions of an existing mortgage to help borrowers prevent them from defaulting, ending up in foreclosure and ultimately losing their home. Changes may include a lower interest rate and extend the term of the loan, which would decrease monthly payments. Fannie Mae has made more than 1.5 million loan changes since 2009 (for related literature, see Fannie / Freddie Bailout winners .)
Fannie Mae HomePath
When forced sales take place on mortgages where Fannie Mae is the owner / investor, or when real estate is acquired through deeds rather than foreclosure or confiscation, Fannie Mae tries to sell the properties in time to minimize potential impact on the community. HomePath. com is the Fannie Mae website where home buyers and investors can search for these properties and make offers, and HomePath Mortgage offers copper financing products for the properties. In some cases, special financing may be available through HomePath Mortgage and HomePath Renovation Mortgage. These include extensive seller contributions for own homes and lower prepayment options for buyers with multiple funded homes.
HomePath. com offers exclusive properties owned by Fannie Mae, and include single-family homes, townhouses, and condominiums. Fannie Mae uses local real estate professionals to prepare, maintain and list the properties for sale. Most offers include photos, property descriptions and other details, including information about school and neighborhood. The number, type and selling prices vary greatly per market, as well as the condition of the properties. Some houses are ready for use, others require repair or even extensive renovations. Every home is sold in the state it is in.