Unit 1 Overview of the Mortgage Markets

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Unit 1
Overview of the Mortgage Markets
Introduction
The interaction between the primary and secondary mortgage markets is
the foundation of the mortgage lending process and is an essential part of
our national economic health. Because of the mortgage markets, the real
estate lending industry has expanded to over $5 trillion in outstanding loan
balances. In fact, the total real estate debt in the country is the largest in
the world, second only to the debt of the United States government.
The mortgage markets are made up of the institutions that originate loans
(primary mortgage market) and the markets in which they are transferred
(secondary mortgage market). The secondary market’s main function is to
get money to lenders in the primary market so they can loan it to
consumers. These markets facilitate the flow of funds for residential
financing.
Learning Objectives
After reading this unit, you should be able to:
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specify the purpose of the mortgage markets.
identify the participants in the mortgage markets.
recognize the types of mortgage-backed securities.
recall the functions of Fannie Mae.
recall the functions of Freddie Mac.
recall the functions of Ginnie Mae.
Overview of the Mortgage Markets
The real estate lending industry is comprised of two distinct markets—the
primary mortgage market and the secondary mortgage market. The
primary mortgage market is the market in which mortgage originators
provide loans to borrowers. The secondary mortgage market channels
liquidity into the primary market by purchasing loans from the lenders.
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Purpose
The purpose of the mortgage markets is to create a continuous flow of
money to borrowers. This stimulates the real estate industry and financial
markets.
Participants
The participants in the mortgage markets are the loan originators, issuers,
securities dealers (brokerage firms and investment banks), and investors.
The participants will be introduced here and explained more fully later in
the unit.
Residential Loan Originators
Residential mortgage lenders (loan originators) are part of the primary
mortgage market. They originate and fund loans to borrowers. Primary
mortgage market lenders include commercial banks, thrifts, mortgage
bankers, credit unions, and others. A mortgage banker is a direct lender
that lends its own money, whose principal business is the origination and
funding of loans secured by real property. Once a loan is originated,
lenders have a choice. Either they can hold the mortgage in their own
portfolios or they can sell the mortgages to secondary market issuers.
About half of all new single-family mortgages originated today are sold to
secondary market issuers. When lenders sell their mortgages, they
replenish their funds so they can turn around and lend more money to
home buyers.
In contrast, a mortgage broker originates loans with the intention of
brokering them to lending institutions. Both mortgage bankers and
mortgage brokers are loan originators who take residential mortgage loan
applications and offer or negotiate terms of a residential mortgage loan for
compensation or gain.
Issuers
The principal secondary mortgage market issuers are governmental
(Ginnie Mae), quasi-governmental (Fannie Mae, Freddie Mac), and
private entities such as investment banks. The issuers create mortgagebacked securities from pools of loans that originated in the primary
mortgage market. The issuers operate exclusively in the secondary
mortgage markets to support lending in the primary market.
Brokerage Firms & Investment Banks
The mortgage-backed securities created by the issuers are marketed by
stock brokerage firms and investment banks such as Goldman Sachs,
Merrill Lynch, Morgan Stanley, Lehman Brothers, Credit Suisse,
Citigroup, Deutsche Bank, and JP Morgan Chase. The Securities and
Exchange Commission (SEC) licenses stock brokerage firms to buy and
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sell securities for clients and for their own accounts. Investment banks
help issuers take new bond issues to market, usually by acting as the
intermediary between the issuer and investors.
Investors
Institutional investors such as pension funds, investment funds,
commercial banks, and life insurance companies purchase the mortgagebacked securities. These investors supply the capital needed to make
loans that, otherwise, might not be available.
Product
The investment that is bought and sold in the secondary mortgage market
is an asset called a mortgage-backed security. Mortgage-backed
securities (MBS) or mortgage-related securities (MRS) are debt issues
collateralized by the mortgages. They will be discussed in detail later in
the unit.
Process
The original lender makes loans to borrowers. Rather than keep the loans,
the lender sells them to one of the issuers. This gives the original lender
more money to make loans to more borrowers while decreasing borrowing
costs.
Issuers purchase existing mortgages with funds they have acquired by
issuing bonds or other types of debt instruments. Through securitization,
the mortgages they buy are formed into mortgage pools and used as
security for those debt instruments. A mortgage pool is a group of
mortgages that usually have the same interest rate and term. The debt
instruments, which are known as mortgage-backed securities, are
collateralized by the mortgage pool.
MBS that represent shares in these pooled mortgages are sold to investors
in the capital market by the issuer, securities dealers, or investment
bankers. The large companies that deal in mortgage-backed securities
include Bear Stearns & Co, Inc.; Cantor Fitzgerald & Co.; Citigroup
Global Markets Inc.; Credit Suisse, Lehman Brothers, Inc.; and Morgan
Stanley, among others.
Originating lenders use the proceeds secured from selling loans to
secondary mortgage market to fund new mortgages. This continuously
replenishes the funds available for lending to home buyers. Just as the
stock market has put investor capital to work for corporations, the
secondary mortgage market puts private investor capital to work for home
buyers. Repeating this cycle increases the availability, accessibility, and
affordability of mortgage funds for low- and middle-income Americans.
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Primary Mortgage Market
The primary mortgage market is the market in which lenders originate real
estate loans directly to borrowers. Participants in the primary mortgage
market include commercial banks, thrifts, mortgage companies, and other
financial intermediaries.
These institutions provide money to qualified borrowers. The borrower is
seeking financing in order to make a purchase or to refinance an existing
loan. Lenders help consumers by identifying the appropriate loan for the
borrower, helping to complete the loan application, and gathering the
necessary documentation required to underwrite the loan. A loan that
meets the lender’s criteria is closed and funded.
Depository institutions, such as commercial banks and credit unions, make
their money by lending at a higher interest rate than the interest rate paid
to their depositors or paid to borrow from the Fed. The goal of all lenders
is to make a profit. The lender is looking for a loan that is an investment
that can be held or sold.
Lenders earn income on the loans they originate in several ways—up-front
finance charges, loan fees, interest from the loan, servicing fees, and
selling the loan. Up-front finance charges, such as points and fees,
increase the lender’s yield on the loan. Points, or discount points, are
calculated as a percentage of the loan amount. One point equals one
percentage point. Therefore, 2 points on a $100,000 loan is $2,000. Loan
origination fees or funding fees are typically one or two points of the
amount of the loan. The income the lender derives from this source is
called the mortgage yield. Mortgage yield is the amount received or
returned from real estate loan portfolios expressed as a percentage.
Much of the lenders’ income is from the loan fees. Some lenders sell their
loans as soon as possible to the secondary mortgage market to obtain more
money. This enables the lender to make more loans and collect more loan
fees.
Loan servicing lenders receive fees for collecting payments from the
borrower on behalf of the loan originator or subsequent noteholder. A
loan servicer collects payments from borrowers, subtracts fees, and sends
the balance of the money to investors who own the loans. The servicer is
in charge of collecting payments, handling escrows for taxes and
insurance, making payments to the mortgage investor, and administering a
loan after it has been made.
Secondary Mortgage Market
In contrast to the primary mortgage market, in which lending institutions
make mortgage loans directly to borrowers, the secondary mortgage
market can be seen as a resale marketplace for loans, in which existing
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loans are bought and sold. Participants in the secondary mortgage market
do not originate loans.
America has a secondary mortgage market that attracts capital from
around the world to finance a wide range of mortgage products designed
specifically to make homeownership affordable and accessible. No other
country has a comparable secondary market.
The secondary mortgage market exists because commercial banks and
thrifts needed to be able to sell their assets quickly when they needed more
money, particularly in a market in which consumers are demanding more
home loans. In the past, the bulk of a financial institution’s resources
consisted of depositor’s funds, which were tied up in long-term mortgage
loans. These funds were not particularly convenient as a source of quick
money because of the perceived risk of default or unsoundness by
creditors who might be located a continent away from the collateral of the
loan in question. To make matters worse, there were areas of the country
with a greater supply of capital in the form of deposits, which resulted in
excess money with nowhere to spend it. Another area of the country
would have a greater demand for mortgage loans but no money to lend
because of lack of deposits. Because lending institutions were unable to
buy and sell mortgages easily, the supply and demand for money was
always uncoordinated.
The solution was to create a mortgage market in which loans could be
bought and sold without difficulty. This allowed funds to be moved from
capital-surplus areas to capital-needy areas and created a stable market.
Mortgage Market Instability
The mortgage market experiences instability. For example, in 2008 and
2009, the Mortgage Bankers Association reported that over 2 million
foreclosures were filed. This is the highest level reported since the
Mortgage Bankers Association started this survey 37 years ago.
The victims of this mortgage meltdown are the unsuspecting investors
and, ultimately, the American public, who will be forced to pay for the
debacle. At this time, the end of the mortgage meltdown is not in sight.
However, the culprits are well known. The list starts with borrowers who
purchased or refinanced homes with loans for which they did not qualify.
Although they should have known better than to get an adjustable-rate
loan that they would not be able to afford when interest rates reset at a
higher rate, many believed they would be able to refinance the loan as the
market prices kept increasing.
Next in line are the greedy and unethical mortgage brokers who pushed
inappropriate loans on borrowers in order to collect very lucrative fees.
They should have explained to borrowers what happens when mortgage
rates reset. However, many mortgage brokers were overcome by greed.
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They kept the money machine moving by offering “no doc” loans—loans
that required no verification of income, employment, or assets. Some
mortgage loan originators and mortgage brokers did not care if the loans
ultimately went bad because by the time they did, the loans were in the
hands of unwitting investors.
Other culprits that should be mentioned include mortgage lenders who
acknowledged the potential risks in the subprime market but chose to
compete to maintain market share by using watered-down loan
underwriting standards. Once again, their risk ended when they sold these
loans to issuers in the secondary mortgage market to be packaged into debt
instruments, such as mortgage-backed securities, and sold to investors.
Pension fund and portfolio managers who were hungry for higher yields
may have been blind to problems with debt instruments backed by
subprime mortgages, but their vision was not helped by the credit rating
agencies. Rating these debt instruments is big business and the same
people who create the debt instruments often pay the ratings agencies for
the ratings. As far back as 2004-2005, portfolio managers were aware of
questionable underwriting, potential fraud, and limited documentation in
the home mortgage industry. With so much money to be earned by
originating, securitizing, and rating, there were too many conflicts to take
a critical view of the rating process.
Mortgage-Backed Securities
Securitization provides liquidity to originators of real estate loans.
Securitization is the pooling and repackaging of cash flow that turns
financial assets into securities that are then sold to investors. Any asset
that has a cash flow can be securitized.
Before securitization became prevalent, banks funded real estate loans
with their customers’ deposits (savings). The availability of credit was
dictated, in part, by the amount of bank deposits. Banks were essentially
portfolio lenders. They held loans until they matured or were paid off.
However, after World War II, depository institutions simply could not
keep pace with the rising demand for housing credit. Asset securitization
began with the structured financing of mortgage pools in the 1970s, which
are called mortgage-backed securities (MBS).
Today, banks and other lenders have the option of retaining the real estate
loans they originate or purchase, or they may sell them to issuers in the
secondary market where loans are pooled. These pools can be used to
back bond issues, package as mortgage-backed securities, or retain as an
investment.
A mortgage-backed security is a type of asset-backed security that is
protected by a collection of mortgages. The mortgages are pooled and
secured against the issue of bonds. Most bonds backed by mortgages are
classified as mortgage-backed securities (MBS). This can be confusing
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because some securities derived from MBS are also called MBS. The
qualifier pass-through is used to distinguish the basic MBS bond from
other mortgage-backed instruments. The value of MBS is based on the
underlying pool of residential mortgages.
Types of Mortgage-Backed Securities
The two most common types of mortgage-backed securities are passthrough securities and collateralized-mortgage obligations.
Pass-Through Securities
The simplest mortgage-backed securities are pass-through securities.
The pass-through or participation certificate represents direct ownership in
a pool of mortgages. They are called pass-throughs because the principal
and interest of the underlying loans are passed directly through to
investors. Each investor owns a pro-rata share of all principal and interest
payments made into the pool as the issuer receives monthly payments
from borrowers. Pass-through securities are comprised of mortgages with
the same maturity and interest rate.
A residential mortgage-backed security (RMBS) is a pass-through MBS
that is backed by mortgages on residential property. A commercial
mortgage-backed security (CMBS) is a pass-through MBS that is backed
by mortgages on commercial property.
Collateralized Mortgage Obligation
A collateralized mortgage obligation (CMO) is a type of MBS in which
the mortgages are put into separate pools with varying degrees of risk and
maturities (tranches). Each tranche is sold as a separate security. Some
CMOs are backed by pools of mortgage-backed securities that are issued
by another agency such as Fannie Mae ,instead of a mortgage pool.
As a result of a change in the 1986 Tax Reform Act, most CMOs are
issued in REMIC (Real Estate Mortgage Investment Conduit) form to
create certain tax advantages for the issuer. Essentially a REMIC is a
way to create many different kinds of bonds from the same mortgage loan
to please many different kinds of investors. A REMIC offers regular
payments and relative safety.
Sequential Pay CMO
In a sequential pay CMO, issuers distribute cash flow to bondholders from
a series of classes, called tranches. A tranche is a part or segment of a
structured security. A security may have more than one tranche, each with
different risks and maturities. Each tranche consists of MBS with similar
maturity dates or interest rates and is different from the other tranches
within the CMO. For example, a CMO can have three tranches with MBS
that mature in five, seven, and 20 years each.
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Stripped Mortgage-Backed Security
A stripped mortgage-backed security (SMBS) is a type of CMO in
which the interest and principal of the mortgage are separated into
principal-only and interest-only bonds.
A principal-only stripped mortgage-backed security (PO) is a bond
with cash flows that are backed by the principal repayment component of
a property owner’s mortgage payments. Because principal-only bonds sell
at a discount, they are zero coupon bonds. A zero coupon bond is a bond
that pays no coupons, is sold at a deep discount to its face value, and
matures to its face value. These bonds satisfy investors who are worried
that mortgage prepayments might force them to re-invest their money
when interest rates are lower.
An interest-only stripped mortgage-backed security (IO) is a bond with
cash flows that are backed by the interest component of the property
owner’s mortgage payments. IO bonds change in value based on interest
rate movements.
Default Risk
The risk of mortgage-backed securities depends on the likelihood that the
borrower will pay the promised cash flows (principal and interest) on time.
Pooling many mortgages with similar characteristics creates a bond with a
low risk of default. Default risk is the borrower’s inability to meet
interest payment obligations on time. Lenders pool mortgages by their
interest rate and date of maturity. Additionally, mortgages are pooled by
the initial credit quality of the borrower. Pools are comprised of prime,
Alt-A, and subprime loans.
Prime: Conforming mortgages, prime borrowers, full documentation
(such as verification of income and assets), and strong credit scores
Alt-A: Non-conforming mortgage (such as vacation home), generally
prime borrowers, less documentation
Subprime: Non-conforming mortgage, borrowers with weaker credit
scores, and no documentation
Some MBS issuers, such as Fannie Mae, Freddie Mac, and Ginnie Mae,
guarantee against the risk of borrower default. Ginnie Mae MBS are
backed with the full faith and credit of the U.S. Federal government.
Fannie Mae and Freddie Mac use lines of credit with the U.S. Treasury
Department to guarantee the MBS they issue.
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Participants in the Secondary Mortgage Market
There are three major participants in the secondary mortgage market: (1)
the Federal National Mortgage Association (Fannie Mae), (2) the Federal
Home Loan Mortgage Corporation (Freddie Mac), and (3) the
Government National Mortgage Association (Ginnie Mae).
They provide stability, liquidity, and affordability to the nation’s housing
finance system under all economic conditions. They stimulate the housing
market, which comprises 10% of the economy. Low and moderateincome families are able to get a higher standard of living in the form of
home ownership.
Both Fannie Mae and Freddie Mac are congressionally chartered,
shareholder-owned corporations commonly known as governmentsponsored enterprises (GSEs). Fannie Mae and Freddie Mac are
considered government-sponsored because Congress authorized their
creation and established their public purposes. Fannie Mae and Freddie
Mac only buy conforming loans to hold in their own portfolios or to issue
securities for sale to investors. Each year they set the limit of the size of a
conforming loan, which is based on the October-to-October changes in
mean home price. Fannie Mae and Freddie Mac are the largest sources of
housing finance in the United States.
Conversely, Ginnie Mae is a government-owned corporation within the
Department of Housing and Urban Development (HUD) and operates
under different regulations.
GSEs – Fannie Mae & Freddie Mac
Government-sponsored enterprises (GSEs) are financial services
corporations created by the United States Congress. Their purpose is to
increase the availability and reduce the cost of credit to the residential
finance, agriculture, and education sectors of the economy. The GSEs that
deal with residential finance are Fannie Mae, Freddie Mac, and the 12
Federal Home Loan Banks. The residential mortgage segment is the
largest of these segments with several trillion dollars in assets. In fact,
Fannie Mae and Freddie Mac own or guarantee about half of the $12
trillion mortgage market in the United States.
Both GSEs fund residential mortgages by purchasing loans directly from
lenders such as mortgage companies and depository institutions and then
issuing mortgage-backed securities (MBS) that are sold to a wide variety
of investors in the capital markets.
Congress Mandated Housing Goals for the GSEs
Congress mandated that the GSEs devote a percentage of their business to
three specific affordable housing goals each year.
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1.
2.
3.
Low- and Moderate-Income Housing Goal: Targets families with
incomes at or below the area median income. (Area median income
is defined as the median income of the metropolitan area, or for
properties outside of metropolitan areas, the median income of the
county or the statewide nonmetropolitan area, whichever is greater.)
Special Affordable Housing Goal: Targets very low-income
families at or below 60% of area median income, and low-income
families at or below 80% of area median income in low-income areas.
Underserved Areas Housing Goal: Targets families living in lowincome census tracts or in low- or middle-income census tracts with
large minority populations.
HUD regulated both Fannie Mae and Freddie Mac from 1968 and 1989,
respectively, until September 2008 when regulation was taken over by the
Federal Housing Finance Agency. The Federal Housing Finance
Agency (FHFA) is an independent agency that was established by the
Federal Housing Finance Reform Act of 2007 to regulate the GSEs.
On Sunday, September 7, 2008, both Fannie Mae and Freddie Mac (and
the $5 trillion in home loans they back) were placed under the
conservatorship of the Federal Housing Finance Agency.
Under
conservatorship, the government will operate Fannie and Freddie until
they are on stronger footing. The mission of the FHFA is to ensure that
Fannie Mae and Freddie Mac are adequately capitalized and that their
businesses operate in a financially sound manner. This will restore
confidence in Fannie Mae and Freddie Mac, improve their ability to fulfill
their mission, and reduce the problems that contributed to the market
instability between 2007 and 2009.
By the 3rd quarter of 2008, both Fannie Mae and Freddie Mac had lost
90% of their stock value due to a flood of foreclosures on subprime and
Alt-A loans. In the preceding year, they racked up about $12 billion in
losses. This subprime disaster wreaked havoc on Fannie Mae and Freddie
Mac even though they were responsible for more than 80% of the new,
properly underwritten mortgages made in 2008.
Backed by the U.S. Department of the Treasury, Fannie Mae and Freddie
Mac will have the funds to support their mortgage-backed securities. This
should provide liquidity in the mortgage market. Mortgage money will
continue to flow and will help borrowers meet the underwriting
guidelines. The government, as the FHFA, does not plan to operate
Fannie Mae and Freddie Mac forever but does want to ensure that
investors feel secure enough to buy the mortgage-backed securities.
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Federal National Mortgage Association
The Federal National Mortgage Association (Fannie Mae) was created
by Congress in 1938 to bolster the housing industry in the aftermath of the
Great Depression. It does not lend money directly to home buyers.
Initially, it was authorized to buy and sell FHA-insured loans from
lenders, but VA-guaranteed loans were added in 1944. This secondary
market for the FHA and VA loans helped make sure that affordable
mortgage money was available for people in communities all across
America and helped fuel the housing boom in the 1950s. Its role was
expanded in 1972, when Fannie Mae was permitted to buy and sell
conventional mortgages. This made Fannie Mae the largest investor in the
secondary mortgage market.
In 1968, the Federal National Mortgage Association was divided into two
entities—the Federal National Mortgage Association and the Government
Housing Mortgage Association (Ginnie Mae). Fannie Mae became a
stockholder company that operated with private capital on a selfsustaining basis, but Ginnie Mae remained a government agency.
Through the years, Fannie Mae has consistently been one of the nation’s
largest sources of financing for home mortgages. Fannie Mae’s common
and preferred stock trades on the OTC Bulletin Board under FNMA.
Fannie Mae is committed to make the American dream of homeownership
possible by expanding opportunities for homeownership and by helping
lenders reach out and serve more first-time homebuyers.
Fannie Mae’s Three-phase American Dream Commitment
1.
Expand access to homeownership for millions of first-time
home buyers and help to raise the minority homeownership rate
to 55% with the ultimate goal of closing the homeownership
gaps entirely.
2.
Make homeownership and rental housing a success for millions
of families at risk of losing their homes.
3.
Expand the supply of affordable housing to where it is needed
most.
Fannie Mae supports the secondary mortgage market by issuing mortgagerelated securities and purchasing mortgages. Fannie Mae buys loans from
lenders who conform to FNMA guidelines and, by doing so, puts
mortgage money back into the system so lenders can make more loans.
Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation (FHLMC or Freddie
Mac) is a stockholder-owned corporation charted by Congress in 1970 to
stabilize the mortgage markets and support homeownership and affordable
rental housing. Freddie Mac stock is traded on the OTC Bulletin Board
under FMCC.
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Its mission is to provide liquidity, stability, and affordability by providing
secondary mortgage support for conventional mortgages originated by
thrift institutions. Since its inception, Freddie Mac has helped finance one
out of every six homes in America.
Freddie Mac links Main Street to Wall Street by purchasing, securitizing,
and investing in home mortgages. Freddie Mac conducts its business by
buying mortgages that meet the company’s underwriting and product
standards from lenders. The loans are pooled, packaged into securities,
guaranteed by Freddie Mac, and sold to investors such as insurance
companies and pension funds. This provides homeowners and renters
with lower housing costs and better access to home financing.
Government National Mortgage Association
The Government National Mortgage Association (GNMA or Ginnie
Mae) is a government-owned corporation within the Department of
Housing and Urban Development (HUD). Ginnie Mae was created in
1968 when the Federal National Mortgage Association was split into
Fannie Mae and Ginnie Mae. Fannie Mae’s focus is to support the
secondary market for conventional loans and Ginnie Mae’s is to support
the market for FHA, VA, and other loans.
Unlike Fannie Mae and Freddie Mac, Ginnie Mae does not buy or sell
pools of loans. Ginnie Mae does not issue mortgage-backed securities
(MBS). Instead, Ginnie Mae guarantees investors the timely payment of
principal and interest on MBS backed by federally insured or guaranteed
loans—mainly loans issued by the FHA and the VA. In fact, the FHA
insures approximately two-thirds of the loans backing Ginnie Mae
securities.
In contrast to the MBS issued by Fannie Mae and Freddie Mac, all Ginnie
Mae securities are explicitly backed by the full faith and credit of the U.S.
Government. This is because Ginnie Mae is a wholly owned government
corporation.
Since Ginnie Mae does not actually issue the mortgage-backed securities,
it works with approved issuers. Approved issuers are lenders that meet
specific requirements and are approved to issue Ginnie Mae MBS.
Approved issuers acquire or originate eligible FHA and VA loans. The
loans are pooled and securitized into MBS, which are then guaranteed by
Ginnie Mae. In fact, Ginnie Mae securitizes more than 90 percent of FHA
and VA mortgages.
Issuers also market and service the Ginnie Mae MBS. A lender may
contract with a service bureau to service the loans in the pool. If approved
lenders collect less from the pool of mortgages than is scheduled, they
have to cover the shortfall with their own funds.
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Summary
The primary mortgage market is the market in which lenders make
mortgage loans by lending directly to borrowers. In contrast to the
primary mortgage market, the secondary mortgage market refers to the
market that involves the buying and selling of existing mortgage loans
from the primary mortgage market or from each other. The secondary
mortgage market serves as a source of funds for the loan originators so
they can continue to make loans and generate income.
The primary market lenders (banks, thrifts, or mortgage bankers) make
real estate loans and then sell them to issuers (Fannie Mae, Freddie Mac,
or other investors). The issuers package the loans into mortgage-backed
securities (MBS), which are sold to investors in the secondary mortgage
market.
The issuer uses the money from the sale of the MBS to purchase more
loans from lenders in the primary market. The loans are packaged and
sold in order to get more money to make more loans, and the cycle
continues.
Although Ginnie Mae is a participant in the secondary market, it does not
issue mortgage-backed securities (MBS). Instead, Ginnie Mae guarantees
investors the timely payment of principal and interest on MBS backed by
federally insured or guaranteed loans.
This cycle and flow of capital has made the housing market in the U.S.
one of the most robust in the world, as well as a model for other countries.
I
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