Fannie Mae and Freddie Mac
Refinance

Jumbo Loans Get Little Help from Fannie Mae and Freddie Mac

June 26, 2008 - Fannie Mae and Freddie Mac are using their newfound freedom in home-loan purchasing to forgo jumbo loans and buy their own mortgage-backed securities.

Three months after the government-sponsored entities received increased lending power from congressional action, a move designed to revive housing starts and stimulate the economy, the companies are bypassing the loans that need the most help in order to reduce their own financial losses.

Jumbo loans, those above $417,000, made up nearly one-third of the US market last year, according to the Mortgage Bankers Association. In February, the fiscal-stimulus bill temporarily allowed Fannie Mae and Freddie Mac to buy jumbo loans in 91 of the most expensive U.S. housing markets. The new congressional rules allowed the companies to enter the jumbo market to inject cash into a struggling sector, and the failure of the companies to do so may have exacerbated the housing slump, according to some analysts.

While the National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008, new projections indicate the amount will be less than $74 billion.

The companies are instead focusing on buying their own mortgage-backed securities, an effort to reboot from record losses of $11.8 billion in the past three quarters. Accounting errors were revealed showing the root of the problem; mortgage defaults, reaching the highest levels in 30 years, were also responsible in part for Fannie Mae and Freddie Mac's financial woes.

Some impact from Fannie Mae and Freddie Mac's entry into the jumbo loan market has been felt. Jumbo rates have fallen by about half a percentage point, and loan prices are often on the same terms as smaller mortgages. In effect, this makes obtaining these loans more affordable and accessible for borrowers.

But the focus on their own products, and on a higher echelon of borrower means many are not being helped. The two companies require a minimum down payment of 10 percent and a credit score of 660 for jumbo loans, meaning many buyers and refinancing homeowners do not qualify.

Congress created Fannie Mae and Freddie Mac to promote home ownership by increasing financing and providing market stability. The companies own or guarantee nearly half of the $12 trillion in U.S. residential mortgage debt. Company profit comes from fees charged on bond guarantees, and by holding assets that yield more than debt.

Bloomberg Article:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aLs42yf_aFfg&refer=us

Refinance at Today's Low Rates!

 

Follow the link to continue reading this article.

Jumbo Mortgage Loans on the Rise

Government-Sponsored Enterprises: Fannie Mae and Freddie Mac Today, Part 1

Government-Sponsored Enterprises: Fannie Mae and Freddie Mac Today, Part 2

Freddie Mac and Scandal

The Relatives of Fannie Mae and Freddie Mac

Trouble Hits GSE Giants Fannie Mae and Freddie Mac

 

 

Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state

Get the Updated and Improved Mortgage Rates App from ERATE.com

iPad for Mortgage Rates

Foreclosure