Fannie and Freddie Explained
With all the talk these days in the world of mortgages about Fannie Mae and Freddie Mac, it is worth considering – who they actually are and what do they do?
Fannie Mae is the Federal National Mortgage Association, and Freddie Mac is the Federal Home Loan Mortgage Corporation. They are what’s called government-sponsored entities, GSEs. Although they have recently been taken over by the federal government, they are still publicly traded companies (both are listed on the NYSE). What GSEs do is provide mortgage lenders with funds. The lenders in turn lend the funds to end consumers.
The process, from beginning to end, goes basically as follows: Fannie and Freddie, through the use of investors raise money to provide to lenders, who in turn lend that same money to people who are either purchasing, or refinancing a home. Lenders find borrowers whose income, assets, and credit fall within a previously determined set of guidelines. Once the loan transactions are completed by the lenders, the GSEs buy these individual loans from the lenders and package the loans into what are called mortgage-backed securities. The mortgages are packaged together based on the type of loan (30-year fixed, 5/1 ARM, etc.) and on the profile of the borrower.
There could be hundreds or thousands of loans in each security. These securities are then sold, to investors, who trade them as they would other types of securities, in markets around the globe. Most of the mortgages in this country are obtained within the guidelines of Fannie and Freddie.
The qualified professionals at MiLEND are more than happy to discuss the programs these two organizations offer. For over two decades, MiLEND has helped thousands of home buyers make their American dream come true. Their helpful, licensed loan experts will take the personal approach to getting you approved for a home loan, refinance, reverse mortgage, or any one of their other helpful loan products or services.
Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!