Who Would Finance Mortgages If Fannie, Freddie Disbanded? – CNBC
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Show Entire ArticleWho Would Finance Mortgages If Fannie, Freddie Disbanded?CNBC.com | July 02, 2010 | 11:44 AM EDTBig changes are in store for the banking system should Fannie Mae and Freddie Mac be revamped or eliminated—both of which are being discussed by housing experts and government officials to deal with the distressed real estate market.
As the system works now with the two entities, Fannie [ FNM 0.3226
-0.0224 (-6.49%) ] and Freddie [ FRE 0.3661
Fannie and Freddie guarantee the mortgage payments, so that the MBS buyer, be it the Chinese government or an American pension plan, has the security of the US government behind them. Their only risk is in the interest rate.
“It helps them make deep and liquid, and it expands, dramatically, the pool of capital that’ll come in and will play and support our housing market,” said Peter Fisher, BlackRock’s managing director and co-head of fixed income.
This system worked great for years. In fact, so great that Fannie and Freddie shareholders got rich because the companies borrowed money in the markets with an implied government guarantee.
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On the surface ..Interestly reading .. Through the eyes of a true professional with years of experience? Down right scary!
As I’m writing this post, there are basically a handful of ways left to actually buy a home with financing.
1. Private Mgt from family or friends
2. Private investor or Portfolio lender*
3. Small or local bank or credit union
4. Large bank or financial institution
Seems like there are plenty of options right? Not so much!
Understand, other than the personal loan, small local bank or portfolio lender, these “retail suppliers” of equity/liquidity are all going back to the same wholesaler with the same guidelines and restrictions. Ok, you are all very smart. Guess who?
Yes, Uncle Sam…ok kind of, uh ?
So, obviously, they aren’t showing up to the treasury and saying hey “we gave the American people loans to buy homes, were out of money to loan can you help?”
Enters Fannie and Freddie… In my personal experience in over one hundred personal transactions in the last twelve months, 98.5 % of the people financing a home, ultimately the deal needed to meet the guidelines of of either Fannie, Freddie, or Veterans Administration guidelines.
Obviously, the company providing the loan is requiring the property meet the guidelines on the onset so they can eventually package the individual loan into a commercial mortgage bank security only to be resold to Uncle Sam!
Ok, smart people, simple math, that’s more than 90% of deals!
Don’t worry, we’ll be fine. Sure …you don’t mind if I get my helmet do you?
Hope this helps. Another “on the street translation”.
Great Morning Quote…How “Important is Passion and or Burning Desire?”
Does your real estate agent have the “Burning Desire” needed to help you buy or sell a home in this challenging market?
“So let your deepest desires direct your aim. Set your sights far above the ‘reasonable’ target. The power of purpose is profound only if you have a desire that stirs the heart.”
Price Pritchett
Author of You2
………………
My group and I are committed to your success! Yes, “We are passionate about your successful outcome.”
We take our mission seriously. What about the people working for you and or on your behalf? Are they truly passionate and committed to your success?
Weichert Realtors and The Shallis Group: Mission Statement
The Reverse Mortgage: What is it and when do they make sense?
I’ve been a “life long” Real Estate Professional and the vast majority of my professional expertise and experience has been working as a Real Estate Broker Sales associate.
My group and I are constantly “learning and relearning” about the various mortgage products and how they effect the validity of any transaction that involves financing. This is especially important when working in urban environments where FHA Approved Buildings are few and far between. Some good examples are Carlton Tower Condos in Passaic and Adams Square Condos in Hoboken.
Carlton Tower Passaic New Jersey
Adams Square Hoboken
Moreover, what is extremely important is our ability to quickly and easily determine if the buyer and/or the buyer of one our customers’ properties will qualify for a loan.
Over the past decade, James Chu, my long time business partner and personal friend has stood the test time. His team is one of the leaders in the mortgage banking industry. When I have a question about mortgages, James and his team are always the people my customers and I can bank on!
When thinking about reverse mortgages, I thought it best to go to the source and experts…
James Chu (Bank of America, Home Loan Manager) and Betty Roche (Bank of America Reverse Loan Officer) have kindly prepared today’s guest post on reverse mortgages and when they are a sensible option.
YOU HAVE CHOICES
If you are a homeowner age 62 or older, a Home Equity Conversion Mortgage (HECM), a type of federally insured reverse mortgage, can help you access a portion of the available equity in your home. A reverse mortgage from Bank of America can help you maintain your independence and give you the security that comes with a financial institution committed to responsible lending.
A Home Equity Conversion Mortgage from Bank of America provides:
- PROCEEDS FOR MANY PURPOSES. The proceeds are generally *tax-free and can be used to pay for medical costs, make home improvements or cover unexpected expenses.
- MAINTAIN HOMEOWNERSHIP. You retain the title to your home throughout the course of the loan.
- NO MONTHLY PAYMENTS. You can continue to live in your home with no monthly reverse mortgage payments.
- FIXED RATE. An option that give you the security of an interest rate that never changes.
- ADJUSTABLE RATE. An open-end credit loan that gives you the flexibility to pay down your balance and redraw funds.
As a reverse mortgage loan officer, I’ll provide you with the information and guidance you need to feel confident that you are making the right choice to meet your individual needs.
Disclosure: *Please consult your tax advisor.
Property insurance is required, flood insurance when necessary. Borrower is still responsible for paying ongoing property taxes. Credit is subject to age and property qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change. Please contact Bank of America for more information.
Thanks James for the great insight into reverse mortgages. If you’re not sure whether or not a reverse mortgage is advantageous for you please don’t hesitate to call me (800 295 5995 ext 911) today.
OPEN HOUSE 6/19: HOBOKEN, NJ
JUST REDUCED TO $279,000! Great unit for first time buyers! This wonderful 2 bed/1 bath condo features a natural oak kitchen w/ Corian countertops, large adjoining living room & dining room, new windows, gleaming HW floors, ample storage space & convenient laundry room in basement. Walking distance to shopping, restaurants, parking (Midtown Garage/330 Clinton) & transportation (short 10 min walk to PATH/Crosstown Bus stops at the corner for quick, easy and inexpensive commute). Low maintenance fee and priced to sell quickly! Don’t miss it!
New Listing Hoboken, NJ: $289,000!
Great unit for first time buyers! This wonderful 2 bed/1 bath condo features a natural oak kitchen w/ corian countertops, large adjoining living room & dining room, new windows, gleaming HW floors, ample storage space & convenient laundry room in basement. Walking distance to shopping, restaurants, parking (Midtown Garage/330 Clinton) & transportation (short 10 min walk to PATH/Crosstown Bus stops at the corner for quick/easy/inexpensive commute). Low maint fee and priced to sell quickly! OPEN HOUSE ON SATURDAY JUNE 19TH FROM 1-4PM….Don’t miss it!
Mortgage Rates and the Impact from Commercial Mortgage-Backed Securities
What has happened to mortgage rates since the U.S. Government pulled out of the CMBS (commercial mortgage-backed security) business at the end of March 2010?
Honestly, I truly believed the cost of a mortgages would have risen once the US Government stopped buying “CMBS”. Not so says Drew McKenzie, one of Bank of America’s leading mortgage bankers!
You may recall that a month and a half or so ago the U.S. Government stopped its large-scale purchases of U.S. mortgage-backed securities. Many pundits thought that mortgage rates would soar once this event occurred. Prevailing rates on mortgage loans up to $417,000 have instead fallen well below 5% on 30-year paper and to 4.25% on 15-year paper. Jumbo paper (above $417,000) is nearly as low with some rates, depending on the county in the U.S., now also below 5% on a jumbo 30-year.
How did this happen?
Here’s one plausible explanation and it has to do with the turmoil in Greece. The Greek government, with the help of our Wall Street banks, borrowed “off balance sheet”, just like Enron did. This made markets and investors very uneasy as it broke a sacred confidence that sovereign nations would always operate in transparent and honest ways with respect to the markets. Since Greece has the same currency as the rest of Europe and is part of the EU, the currency for all of Europe has been pushing down a lot. Nearly every hedge fund that operates in the currency markets is “short” the Euro, meaning they have bet it will fall and continue to fall. Since currency markets are many times the size of debt and equity markets, there is a lot of money looking for a home (when a Euro is “sold” the money has to go into something).
As banks and investors sold or dumped Euros, money has been flowing into (buying) U.S. treasuries faster than BP can pump oil into the Gulf. This purchasing has brought U.S. treasury rates down quite a bit and made mortgage bonds look attractive in terms of yields offered to an investor. So investors, not the government, have been snapping up (buying) mortgage-backed securities. This in turn has pushed mortgage rates as low as can be recalled.
How long this latest financial hiccup will last is unknown at this point.
Guest post provided by long time business partner and friend, Drew McKenzie.
Drew McKenzie
Phone: 973.316.4574 or 973.316.4574
Fax: 866.759.8022
email: drew.mckenzie@bankofamerica.com
Hoboken Real Estate: Great new property under 500K
| Great NEW listing in Hoboken under 500K: two bedroom two bathrooms OPEN HOUSE SUNDAY 1-4pm May 16th or CALL IMMEDIATELY FOR EXCLUSIVE SHOWING 201-988-139. |
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| I just found a property and wanted to share it with you! Source: theshallisgroup.idxco.comAbove is the link to the property that I found. What do you think? |
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| sean@theshallisgroup.com sent this using ShareThis. |
Adams Square Exclusive Opportunity
| anthony@theshallisgroup.com has shared: I just found a property and wanted to share it with you!
Great exclusive listing in Adams Square! 3 beds/2baths, under $500K. with parking and approved for 3.5% down payment! |
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| Exclusive and Limited Opportunity! 3 Bedrooms and 2 Baths with Parking in the heart of Hoboken under 500K… Luxury Elevator building…..Call Sean Immediately for more info 201-988-1393 | |
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Mixed Use Property: Commercial and Residential
So what is a mixed use property and is it for you?
According to Wikipedia, mixed-use development is the practice of allowing more than one type of use in a building or set of buildings. In planning zone terms, this can mean some combination of residential, commercial, industrial, office, institutional, or other land uses.
In simple terms, it’s a property that is zoned and can legally be used for residential and business purposes allowing you to live and work in your own home!
Ok, who would buy this property is a little trickier to answer!
This space is perfect for someone looking to either start and or downsize their existing business. Typically, this situation is ideal for the sole practitioner such as an accountant, doctor, dentist, lawyer, masseuse, fortune teller or hairstylist just to name a few.
Every property has a buyer. You just need to know where to look.
Tired of waiting for the buyer to come to you …ME TOO!
Call me immediately at 201-427-1032 and let Sean T Shallis of Weichert Realtors and the Shallis Group find your next buyer!
Great Towns on New Jersey’s MIDTOWN DIRECT Train Line: Sean Shallis interviewed on WPIX (video)
As promised here is the video of Sean interviewed this morning on WPIX discussing the criteria parents can use to select where to live in New Jersey.
…and here are those reports that were discussed in the news segment, showing School Budget cuts, and graphs that map Real Estate Taxes vs SAT Scores.
![Regional Map [NJTransit]](http://www.njtransit.com/images/hb_final_1031.gif){kind=link}