Introduction to Fannie Mae Mortgages

People often presume Fannie Mae mortgages are held by a government entity. However, this organization hasn’t been operated as a federal business since 1968. Instead, Fannie Mae is a government sponsored enterprise (GSE) that is publicly chartered, but privately owned by shareholders.

Presently, Fannie Mae mortgages comprise about 50 percent of the total number of existing home loans. Coupled with mortgage notes owned by Fannie Mae’s partner company, Freddie Mac, the mortgage portfolio of both GSE’s surpasses $5 trillion.

Fannie Mae is not involved with originating home loans. Rather, they buy mortgage notes from lenders and put them together with other financial products that are sold to private investors and investment groups.

Most people are unaware that the Federal Reserve Board limits the amount of money financial institutions can provide for real estate loans. In order to keep lines of credit available, Fannie Mae buys outstanding loans from various lenders.

Fannie Mae has been the driving force in helping Americans to buy affordable housing since 1938. It was founded during the Roosevelt Administration with the intended purpose of ensuring Americans were given opportunities to achieve the American Dream of homeownership.

In 1968, Fannie Mae changed from a government owned enterprise to a private shareholder-owned corporation. For nearly 40 years, Fannie Mae prospered and developed supplemental programs to boost real estate sales.

Fannie Mae began facing massive financial problems when the mortgage crisis began in 2007. Months later, both Fannie Mae and Freddie Mac were placed into conservatorship by the Federal Housing Finance Agency. Billions of taxpayer dollars were infused to prevent complete collapse of the mortgage industry.

Even though federal bailouts still infuriate the American public, the fact remains if these GSE’s hadn’t received funding, America’s real estate market could have been decimated even more than it has been.

There is little question that most American’s don’t think highly of Fannie Mae. However, since the bailout this GSE has made positive changes and continue to make improvements.

Along with creating programs that provide help to people facing foreclosure, Fannie Mae also established Homepath Mortgage to assist people with buying bank owned real estate at reduced prices.

Fannie Mae Homepath properties consist of residential realty that was taken back via the foreclosure process or given back to lenders using deed in lieu of foreclosure. Buyers that finance Fannie Mae properties through Homepath Mortgage receive reduced down payment requirements, lower interest rates, and buyer incentives.

Fannie Mae also established KnowYourOptions.com; a website that presents each available option for people struggling to meet mortgage obligations. Some states have setup Fannie Mae mortgage help centers where homeowners can meet face-to-face with housing counselors.

Homeowners that don’t live close to a mortgage help center can receive housing counseling over the phone.

Programs presented at KnowYourOptions.com include: refinancing mortgages, loan modification, forbearance agreements, deferred payments, and foreclosure alternatives of short sales, deed in lieu, and deed for lease. The latter is an option that lets homeowners return their house to the bank and lease it back as a tenant.

It is highly unlikely that Fannie Mae will go out of business any time soon. Therefore, homeowners ought to take advantage of Fannie Mae loan mortgage programs that were established using taxpayer funds.


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