Who are Fannie Mae and Freddie Mac?
Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. They were originally created to raise homeownership levels and increase the availability of affordable housing.
Fannie and Freddie don’t sell mortgages directly to homeowners. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages.
In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government.
How do Fannie and Freddie impact Brooklyn real estate?
- They contributed to the financial crisis and real estate downturn, by loosening underwriting standards, buying and guaranteeing risky loans and increasing purchases of mortgage-backed securities.
- They are key players in the government’s Making Home Affordable foreclosure-prevention program. If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to refinance your loan and take advantage of lower interest rates.
- They influence mortgage interest rates and the availability of home loans. Freddie, Fannie and the Federal Housing Administration together now guarantee about 90 percent of all new mortgages, far above their historic level.
What’s going to happen to Fannie and Freddie?
Fannie and Freddie’s future is uncertain. The House Republicans and the Obama administration agree that the pair should be done away with. But this will not happen soon, if at all. Congress must agree on a plan, which could take years, and then the market’s dependence on the companies and the financial backing they provide must be reduced.
If you have questions about Brooklyn real estate or how national or international events impact Brooklyn real estate, please give Charles D’Alessandro Your Brooklyn real estate agent with Fillmore Real Estate a call at 718/253-9600 ext 206 or email me at [email protected] I’m happy to help.