Fannie Mae is a Congress-approved bureau created to help stabilize the housing industry. They are the biggest purchaser of loans from lenders (the other being Freddie Mac, which is also a Congress-approved bureau). Loans purchased by Fannie Mae are federally backed. They protect lenders and borrowers from serious losses of money by adding the federal backing.
After lenders issue loans, they sell them so they can have money on hand to continue lending. These loans are purchased primarily by Fannie Mae and Freddie Mac. These institutions secure and guarantee loans as a way to protect the overall health of the real estate industry.
Fannie Mae was created by Congress in 1938 to support stability, affordability, and liquidity in the secondary mortgage market where mortgage assets are purchased and sold by investors. Fannie Mae is not allowed to issue loans or lend money directly to consumers in the primary mortgage market.
The primary activities of this institution are to secure mortgage loans that have been made by lenders. They do this by creating mortgage-backed securities, which are then traded on the secondary market. Fannie Mae gets the funds to purchase mortgage assets by creating these portfolios and offering a variety of debt securities in home and international markets. Fannie Mae also has other investments that are designed to help increase the amount of affordable housing throughout the country.
By federal mandate, Fannie Mae is required to keep cash flowing to lenders to ensure that people can more easily buy or rent a home. Fannie Mae has the largest foreclosure prevention operation in the world and they work with mortgage lenders, housing specialists, and other partners to help homeowners in distress find options and solutions that best meet their needs.
Learn more about Fannie Mae loan verification and see if you qualify for a HARP loan, fill out our quick 1-minute form to have a Mortgage Advisor contact you.
Fannie Mae focuses on the following:
- Providing mortgage liquidity, enabling free-flowing funds for the mortgage market
- Provide assistance for distressed homeowners through a series of loan modification, refinance programs, foreclosure avoidance, and short sale operations
- Strengthening lending standards and implementing practices that encourage sustainable lending so home buyers can find lending options that are affordable for long-term situations
During the recent economic recession, the real estate market crashed, causing home values across the country to plummet. Millions of people found themselves in upside-down loans where they owed far more than what their home was worth. As a result of the recession, Fannie Mae instituted the Home Affordable Refinance Program (HARP) to help homeowners in these situations find healthy mortgage options benefitting them as well as the lender while preventing short sales and foreclosures. This program also helps to stabilize the whole housing sector and will help to prevent another real estate crash.
In order to be eligible for HARP, your loan must be owned by either Fannie Mae or Freddie Mac. You can talk to your current lender to determine which institute owns your loan. You can also check Fannie Mae’s website here to see if they own your loan. If your loan is owned by either Freddie Mac or Fannie Mae, you must then also owe a minimum of 80% of the Loan-to-Value (LTV) on your home. This restriction is in place because the HARP program was created to help people who could not receive financing through other means.
If you find yourself underwater in your loan situation, it is definitely worth your time examining your HARP options.
See if you qualify for a HARP loan, fill out our quick 1-minute form to have a Mortgage Advisor contact you.