The Federal National Mortgage Association, also commonly referred to as Fannie Mae, is an agency of the U.S. Department of Housing and Urban Development, also known as HUD. It is an executive department that manages and finances the Countrywide lender program, which provides home mortgages for the nation’s largest lenders. Fannie Mae is partially responsible for helping to keep the American housing market afloat during the recent mortgage crisis.
The Fannie Mae guaranty programs include a wide variety of loans. They may require various forms of collateral such as cash reserves, preferred stock, or first lien on real estate. The amount of security a lender requires varies based upon the amount of the loan and risk involved. Some loans may require only a down payment and no second lien, while other programs may require up to 100% down and a security deposit. Cash reserves may allow up to three times the amount of the loan’s cash value in case of a bankruptcy or loss.
The majority of Fannie Mae loans are offered through the Home Affordable Modification Program (HAMP), which is a program designed to assist borrowers with interest rates and adjustable interest rates that are at extreme lows. Most lenders will qualify for the HAMP program if they meet certain criteria, including having a current loan balance, not requiring cash reserves, and making at least five payments toward the loan each month. The majority of Fannie Mae loans are one of a kind, so it can be difficult to tell what specific loans are offered in the HAMP program. This can make refinancing with sub prime or junk credit rated loans a bit more difficult, but it may be possible if you know the specific loan limit you need to fulfill for eligibility.
The main source of financing for Fannie Mae mortgages is the United States Department of Housing and Urban Development (HUD), which distributes loans among various government and private financial institutions. In order to qualify for a home loan through HUD, you must first become a member of one of their programs. Most people who work with HUD are first time homebuyers, but other commercial real estate loans need to be independently verified to ensure that there are no errors on your application.
Private mortgage finance companies like Fannie Mae compete with government enterprises in the secondary mortgage markets. When buying a house, both Fannie Mae and Freddie Mac will offer you a fixed rate mortgage that remains in effect throughout your life. These government enterprises have a legal obligation to maintain liquidity in the secondary mortgage market. They do this by passing on payments to buyers that exceed their costs of financing. If an investor overuses his or her liquidity, the enterprise could lose its access to government funds, which could lead to a complete cessation of lending.
In order to purchase a home with government mortgage loans, you will have to find an institution that is willing to lend you money. One way that you can find lenders that specialize in this business is by searching online. Some of the criteria that you will need to look for in order to find a good fit for your needs include credit unions and other non-government mortgage firms.
One advantage of working with credit unions and other lenders that are not government enterprises is that many of them do not require you to secure your loans with up-front capital. You will still need to submit a down payment, but you may also have no income verification, which allows you to qualify for a low interest rate as well. Many mortgage bankers are also not going to require you to put down a down payment, but they will require you to be a home owner that has equity available in your home in order to qualify for a loan. This means that you must own a primary residence, but this equity is typically not more than half of the total value of your home.
As you can see, you do have some different options when it comes to finding Fannie Mac mortgage loans that conform to your budget. While they have received a great deal of bad press over the past couple of years, they are still legitimate businesses and do provide a valuable service to consumers. In addition, there are many mortgage giants that are also providing mortgages to borrowers who need assistance, so you should not write them off entirely. All you need to do is determine if you qualify for one of their mortgage assistance programs.