Creating the Secondary Mortgage Market Players and History Brenda Buckman

Topics During Presentation History The Players Secondary Mortgage Market Process How It May Impact You

House Buying Back When… Banks were “storage” for saved money Was not a place to receive mortgage loans The very rich built large apartment and housing complexes for people to live Only 4/10 households owned their home Mortgage loan terms: Limited to 50 percent of the property's market value Repayment schedule spread over three to five years Ending with a balloon payment.

Federal Housing Administration Created as part of the National Housing Act of 1934 Help get American “back on their feet” The Great Depression FDR Unemployment Post WW II Suburbs Jobs

The Major Players Charter: Federal National Mortgage Association Government National Mortgage Association Federal Home Loan Mortgage Corporation Charter: To expand the secondary market for mortgages and mortgage backed securities by buying mortgages made by savings and loan associations and other depository institutions.

Conforming Loans Office of Federal Housing Enterprise Oversight Sets criteria for conforming loan limits Applicant's: Debt to Income ratio Income Employment history Net worth Credit rating Open credit lines

PMI Behind the Scenes Lenders (Banks) Government Sponsored Entities or “Private Bonds” Investors PMI

How It May Impact You Underwriting Guidelines Changes can affect your ability to obtain a loan Guidelines are to create “conforming” loans To sell in secondary market Conforming loans are less likely to default Paying PMI

Questions? Overview Why the Secondary Mortgage Market was created The Major Players Fannie Mae Ginnie Mae Freddie Mac The process from you to the investor How this “behind the scenes” market may impact you Questions?

References Fannie Mae. (2011). Retrieved from http://www.fanniemae.com/ Feddie Mac. (2011). Retrieved from hhttp://www.freddiemac.com/ Ginnie Mae. (2011). Retrieved from http://www.ginniemae.gov/ Cornett, B. (2009, February 23). How does the secondary mortgage market work?. Retrieved from http://www.homebuyinginstitute.com/mortgage/how-does- the-secondary-mortgage-market-work/ Oliver, M. (2009, February 23). How the secondary mortgage market works in the united states. Retrieved from http://www.sellingtucsonrealestate.com/blog/how-the- secondary-mortgage-market-works-in-the-united-states/ Mortgage-backed securities. (2010, July 23). Retrieved from http://www.sec.gov/answers/mortgagesecurities.htm