Summary
Secondary Market - Fannie Mae, Freddie Mac
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Extract
Crowding out in the nonconforming market?
How will nonconforming lenders do when Fannie and Freddie move more aggressively into that market? What are the niche strategies that are helping these nimble, smaller companies survive?
FANNIE MAE AND FREDDIE MAC have similar effects on the mortgage industry as the sun does on the earth. These two government-sponsored enterprises (GSEs) can sustain life in the mortgage markets--and stifle it as well--just as the sun can with its varying degrees of solar energy. As the two secondary market companies continue buying more loans farther down the credit spectrum, some lenders praise the sunlight while others curse the heat. So prominent are the two GSEs in mortgage finance that there is an exclusive word to describe the loans they buy: "conforming"--as in, meets their criteria for purchase. The best-known criterion is loan amount. Loans that exceed the current ceiling of $300,700 may not, by regulating statute, be purchased either by Fannie Mae or Freddie Mac. These days, that's the easy part of the ...See the full content of this document
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