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Creating the Mortgage Markets & The major players

Ahleeya Vang Brooke Maxwell. Creating the Mortgage Markets & The major players. Agenda. Creating the Mortgage Market 1900: Who and Loan Characteristics 1930: Great Depression Federal National Mortgage Association Fannie Mae Government National Mortgage Association Ginnie Mae

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Creating the Mortgage Markets & The major players

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  1. Ahleeya Vang Brooke Maxwell Creating the Mortgage Markets & The major players

  2. Agenda • Creating the Mortgage Market • 1900: Who and Loan Characteristics • 1930: Great Depression • Federal National Mortgage Association • Fannie Mae • Government National Mortgage Association • Ginnie Mae • Federal Home Loan Mortgage Corporation • Freddie Mac • Sub-Prime Lending

  3. Creating the Mortgage Markets • Early 1900 • Who? • Only the rich could afford to buy homes • Loan Characteristics • High down-payments • Short maturity (6-11 years) • Balloon payment at end • Regional rates

  4. Creating the Mortgage Markets • 1930s: The Great Depression • National Mortgage Market created • Offered national rates instead of regional rates • FHA & VA insured mortgages • Reduced risk to lenders • Changed overall characteristics of contract structure • Lower down-payments • Longer maturities (30 year loans) • Fixed rates • Lower interest rates

  5. Fannie Mae • Created in 1938 • To make loans accessible at a 30 year fixed rate, making loans more accessible to families. • Operates in the secondary market • Works mainly with mortgage bankers, brokers, and primary mortgage partners. • Fund by issuing debt: national & International • 3 main businesses • Single family, housing & community development and capital markets.

  6. Created in 1968 Does not buy, sell loans or issue mortgage-backed securities Guarantee MBS backed by guaranteed loans Federal Housing Administration (FHA) Department of Veteran Affairs (VA) Rural Housing Service (RHS) Office of Public and Indian Housing (PIH) No matter what they are fully backed Ginnie Mae

  7. Success of Ginnie Mae • Not Involved in the “Meltdown of 2008” • Stay true to their mission statement • Guaranteed over $2.8 trillion ($2.7 trillion, just single family) in mortgage backed securities

  8. Fannie & Ginnie Mae Loan Limits • Housing & Economic Recovery Act of 2008 • Changed the way we limit conforming loans. • General Conforming Loans • High Cost Conforming Loans • Chart of Historical Loan Limits • http://www.fanniemae.com/aboutfm/pdf/historicalloanlimits.pdf

  9. Created in 1970 Emerged from the Emergency Home Finance Act of 1970 Mission: to provide liquidity, stability and affordability to the housing market. Helps with competition for the newly private Fannie Mae. Essentially the same helps with single family, multi family, investment business Freddie Mac

  10. Sub-Prime Lending • Financial institutions lending to people who do not meet loan standards. • Lack of people who fit standards • Had to go to people who didn’t conform • Advertise at a low interest rates • Rates hiked up • Housing Market fails... • Prices of home come down & people have no equity • Excess of homes, buyers market • Banks have all the homes & they aren’t worth anything

  11. Fannie Mae Stock Prices • This chart shows a 52 week rise and fall of Fannie Mae’s stock price. • High of $28.78 and a low of $.30 • The biggest low was in near December 2008

  12. Ginnie Mae Stock Prices • 52 Week Stock prices • High of $11.36 and a low of $10.69 • Not as much difference, due to the fact they are government backed.

  13. Freddie Mac Stock Prices • 52 week stock prices. • High of $26.80 and a low of $.25. • The lowest point was in between September & October of 2008.

  14. Summary • 1900’s loans accessible with balloon payments • Great Depression • Fannie Mae • Ginnie Mae • Freddie Mac • Sub-prime lending

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