What happens if Fannie Mae and Freddie Mac go under?

What would happen if Fannie Mae and Freddie Mac go under? If Fannie and Freddie were to fail, the real estate market would have a big problem on its hands. Cheap mortgage loans would probably dry and thus causing the real estate values to plummet. If you did want to get a home, the interest rate that you would pay would be a lot higher. Fannie Mae and Freddie Mac buy over half of all mortgage loans originated in the United States. If the government would not let Bear Stearns crash I can't see how they could let these two mortgage giants fail.

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What is Ameri Dream?

What is Ameri Dream? Ameri Dream is a down payment assistance program to help low and middle income people buy homes. You can get up to a 3% down payment gift through the Ameri Dream non profit foundation. You can also get an additional 3% assistance for closing costs. So you can buy a home with no money down and no money out of pocket with Ameri Dream. The best part is that you can move into your new home with an immediate 3% equity. This is even a better deal than the Fannie Mae My Community loan program. On the My Community loan program you could get in for no money down but you would not have any equity if you did the 100% loan.

What is Ameri Dream?

Mortgage Education

What is Fannie Mae

Fannie Mae stands for the Federal National Mortgage Association. It is referred to as Fannie Mae, Fannie, FNMA or Fanny. Fannie Mae provides the secondary market for home mortgages. Fannie Mae has a specific criteria for mortgages that it sells. The loans are then put into mortgage pools and then are sold to Wall Street and other investment entities. Fannie Mae only deals in conforming loans. Currently a loan is conforming if it below a certain amount. For example in Maricopa County Arizona, the conforming loan limit is $417,000. Anything about this amount would be considered a Jumbo Loan and would have a different set of lending criteria.

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Raise the conforming loan limit to help out the Real Estate market

Ben Bernanke lowering the federal reserve rates every few weeks wont be enough to put life back into the real estate market. The problem as from what I can see it is that the conforming loan limits in most areas are to low for Fannie Mae and Freddie Mac. I live in Maricopa County where the conforming loan limit is $417,000. If you live in Scottsdale your home may sit for awhile on the market due to the fact that housing prices are much higher in these areas. The problem is that once you go over the $417,000 threshold you get into jumbo mortgage rates. Rates on Jumbo Loans can be 2% or more higher than for a comparable non conforming loan. This prices most people out of the market for higher priced homes, not to mention that you will need to bring in a heftier down payment to be able to qualify. We must get these limits down to get the mid level properties moving again.

Mortgage Articles

Did Fannie Mae put your home in a Declining Market Status?

Across the country property values have done a free fall while some areas have remained relatively stable. In Maricopa County Arizona, Fannie Mae has declared this county a declining market. What this means is that every appraisal that they look at, they are going to cut the value of the appraisal by 5%. What this means now is that you will have to have to put money down if you want to buy a home. They will no longer do 100% financing. If you are trying to refinance, you better have equity in your home or they will no longer look at you.

There are portfolio lenders out there that will still do one hundred percent financing, they just charge a higher rate for it. US Bank still offers 100% financing in areas that are deemed declining by Fannie Mae, you can expect to pay about 1.25% higher rates over conventional lenders that sell their loans to the Fannie Mae and Freddie Mac corporations.

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