Fannie Mae and the Home of Your Dreams by truth4reviews


									                      Fannie Mae and the Home of Your Dreams

        Ever wonder about owning your own home? If you’re like millions of
Americans, the dream is a real possibility. Thanks in part to the government, and their
foresight in establishing the Fannie Mae Corporation. Until recently, Fannie Mae was a
part of the US Government, and was overseen by the Housing and Urban Development
branch of that government. Now, however, Fannie Mae is a privately held, stock
ownership company that promotes the growth of the housing industry by making it
possible for many low-to-middle income Americans to own homes.
        How did all this come about, and what does it mean to the mortgage industry?
Let’s take just a moment to explore Fannie Mae’s history, mission, and place in the
current mortgage industry.
        In 1938, Fannie Mae was established by the US Government to promote the
growth of home ownership by providing a secondary mortgage market. What is a
secondary mortgage market? Well, the secondary mortgage market exists in the buying
and selling of a mortgage from one lender to another. The bank, or Mortgage Company
that provided you with your loan, can turn around and seek to sell your mortgage to a
company such as Fannie Mae. This frees up their cash to make another mortgage loan.
And the cycle of growth is expanded and sustained in this manner. The idea and concept
worked, and today, Fannie Mae has helped millions of Americans achieve the dream of
home ownership.
        In 1968, just thirty years later, Fannie Mae became a private company operating
with private capital. She had outgrown her need for federal funding and supervision.
The housing industry has continued to grow, and currently the entire mortgage market is
experiencing phenomenal success.
        Thanks also to the available technology, Fannie Mae helps today’s lenders
approve customers in less than 24 hours. Many lenders use the automated system
provided by Fannie Mae to seek and get approval for borrowers much faster than
anything available, even 10 years ago. Fannie Mae Corporation has done a fantastic job
of promoting the growth of housing among the low-to-middle income Americans for the
last 10 years, and thanks to those efforts, more American own homes now, than in any
other period in history. That’s quite an accomplishment, by a company that never
directly lends money to the consumer.
        Fannie Mae deals only in the secondary mortgage market, this way Fannie Mae
Corporation can ensure that money for mortgages is available throughout the 50 states
and that as many homeowners as possible can take advantage of home ownership.
        How does Fannie Mae continue to fund the mortgages that she buys? Through
the issuance of mortgage backed securities. These securities known as MBS are issued to
investors. When Fannie Mae issues the MBS, she is guaranteeing the investors a return
on their investment, and at the same time, providing a source of funding for issuing
further mortgages. This provides the nation’s lenders with a steady stream of cash to
continue to make mortgages available to the consumer.
        How does all this relate to the home of your dreams? Well, stop just a moment to
connect all the dots. Fannie Mae buys mortgages from your local lender. The lender
receives the proceeds from that purchase, and can then offer a new mortgage to you. It’s
a steady and continual circle of growth. Why? Well, Fannie Mae isn’t the only lender in
the secondary market. Insurance companies, pension funds, securities dealers, and other
financial institutions buy mortgages on the secondary market. Who invests in these
insurance companies, pension funds and securities dealers? Where do they get their
money? From taxpayers just like you. Mortgage holders just like you. Now can you see
how Fannie Mae and other mortgage lenders in the secondary market, work to foster
home ownership and community growth, all in one process?
        The primary focus for Fannie Mae, operating under a government directive, is to
provide the maximum amount of help to lenders in making mortgage loans to the low, to
middle, to moderate income families across America. Fannie Mae is also involved in a
nationwide effort to join with lenders and community partners to create even more home
ownership possibilities.

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