This Article Is About President Trump To Privatize Fannie Mae And Freddie Mac Mortgage Markets
Fannie Mae and Freddie Mac are the two mortgage giants in the United States.
- Fannie Mae and Freddie Mac set the lending standards on conventional loans
- Conventional loans are often referred to as conforming loans
- This is due to the fact conventional loans need to conform to Fannie Mae and/or Freddie Mac Lending Guidelines
- Conventional Loans are not government loans
- So why do conventional loans need to conform to Fannie Mae and/or Freddie Mac Conforming Guidelines?
- The reason is both Fannie Mae and/or Freddie Mac will not purchase conventional loans originated and funded by a bank and/or private lender if they do not conform to their guidelines
- Lenders use their own money to fund home loans
- They use their warehouse lines of credit to originate and fund mortgages
- Once the conventional loan, if funded, they sell them on the secondary market to Fannie Mae and/or Freddie Mac
- Fannie/Freddie only buys loans that conform to their guidelines
In this article, we will discuss the breaking news of President Trump To Privatize Fannie Mae And Freddie Mac.
The Roles Of Fannie Mae And Freddie Mac
Both Fannie Mae and Freddie Mac were created by the U.S. Congress.
- The roles of Fannie Mae and Freddie Mac is to provide mortgage market liquidity, stability, and most importantly, affordability to lenders and borrowers in the U.S.
- The most important role of Fannie Mae and Freddie Mac is to provide access to funds to the countless financial institutions such as banks, credit unions, and mortgage lenders who originate and fund home loans
- This task is accomplished by both Fannie and Freddie buying mortgage loans from registered and licensed mortgage companies
- Fannie Mae and Freddie Mac will either hold the mortgages they purchase on the secondary market in their investment portfolios and/or bundle them up as mortgage-backed securities (MBS) and sell them in the public market to investors and financial institutions
- By buying the mortgages from lenders, the lenders get their warehouse lines of credit relieved to repeat the process and originate and fund more loans
This enables hard-working individuals and families to purchase homes. By relieving lenders to pay down their warehouse lines of credit, lenders can always have a steady stable supply of funds to fund more loans.
Liquidity For Mortgage Companies
Fannie Mae and Freddie Mac work closely with investors of the secondary mortgage markets in selling them mortgage-backed securities.
- If it were not for Fannie Mae and/or Freddie Mac, these investors would not purchase mortgage securities
- This process allows lenders to always have an ample supply of funds to fund more loans for real estate financing at low rates for homeowners
- Another role of Fannie Mae and Freddie Mac is to keep the mortgage markets in line and stabilize it when it is needed in times of turmoil and stress that may threaten the housing market and overall economy
Many wonder what Trump To Privatize Fannie Mae And Freddie Mac will do for the average U.S. consumer. We will discuss the potential results of President Trump To Privatize Fannie Mae And Freddie Mac.
News Of President Trump To Privatize Fannie Mae And Freddie Mac
On Thursday, September 5th, 2019, The U.S. Department of Treasury announced its plans in making changes to the U.S. Housing and Real Estate Markets.
- One of the main factors in accomplishing this task is for releasing control of Fannie Mae and Freddie Mac by the government
- This means privatizing Fannie Mae and Freddie Mac
- Fannie Mae and Freddie Mac are the two mortgage giants in the U.S. responsible for backing over 50% of the mortgages in the U.S.
- Both Fannie and Freddie have been under government conservatorship since the 2008 real estate and financial crisis
- President Trump To Privatize Fannie Mae And Freddie Mac allows the two Government Sponsored Enterprises (GSE) to be privatized again like it was prior to the 2008 Housing Bubble Crash
- The government will collect a fee for its role in protecting the two mortgage giants
- Congressional approval is not needed on Trump To Privatize Fannie Mae And Freddie Mac
What Are The Effects Of Trump To Privatize Fannie Mae And Freddie Mac
The majority of mortgage professionals and experts welcome the privatization of Fannie Mae and Freddie Mac and its release from conservatorship. Leading economists and housing analysts agree the government postpone the privatization until policy reforms have taken place and mastered.
This is a developing story. This breaking news caught everyone by surprise. We will keep our viewers informed as more news develops.
