Fannie Mae Trying to Help Housing Market

home on a stack of cash

According to Fannie Mae President and CEO Michael Williams, Fannie Mae is funding lenders on the loans guaranteed by the mortgage giant faster than ever before.

This is in an effort to ensure that the lenders have the cash they need to continue funding loans. It’s Fannie’s own way of helping to stimulate the economy—specifically the housing and lending market.

In the past, it could take Fannie up to a month to buy loans from lenders that Fannie then packages together into mortgage-backed securities. (Can we say this is a huge piece of what has gotten us into the current financial crisis?) Recently, this time period has been reduced. In fact, the payment is almost immediate upon receipt of the mortgage loans bought from lenders.

Fannie Mae and Freddie Mac together fund about 70% of the cash lenders use to make mortgage loans. The Federal Housing Administration (FHA) provides about 20% and private institutions make up the difference (around 10%). This is almost a complete 180 degree  turn from the housing boom when private lending institutions were the ones infusing cash into the lending industry. Private institutions loaned about 60% of the money, followed by Fannie, Freddie and FHA making up the other 40%.

These housing stimulus efforts are helping the lending and housing market to move to steadier ground, but there are still obstacles ahead. With one in ten homeowners missing at least one mortgage payment, and one in 25 homeowners in the process of foreclosure, troubles lo0om.

Those doing the best in this market are the folks who’ve been using their homes to pay for their homes. Yes. Using the equity in their home to pay off their mortgage principal. The result? They can buy more real estate, always a good investment when entered into correctly. Watch a video presentation of how to pay off your home years sooner.

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