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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Bill/WA who wrote (82246)	3/19/2001 6:25:52 AM
From: KeepItSimple	Read Replies (1) \| Respond to of 436258

>question...who holds these mortgages in the end, all citizens do. we pay the taxes that will bail these bad loans out.

To: Bill/WA who wrote (82246)	3/19/2001 11:10:36 AM
From: Ilaine	Read Replies (1) \| Respond to of 436258

VA loans are made by private banks but guaranteed by the Veteran's Administration, only to veterans, low down payment. FHA loans are made by private banks but backed by the Federal Housing Administration which is a division of HUD (Housing and Urban Development), and provides mortgage insurance to the lenders. These may be low down payment, too. HUD also sells houses which came into its possession as the result of failed FHA loans. Fannie Mae is one of those weird quasi-private quasi-public corporations the government sometimes sets up, and is in the business of buying mortgages from lenders and securitizing them and selling the securities. The lenders like this because they still get paid to service the loans but don't have any of the risk. Obviously lenders are more likely to hold the best loans and sell the rest. The loan limit for Fannie Mae is $275K. Fannie Mae buys only FHA insured loans. Freddie Mac operates the same way as Fannie Mae but doesn't buy FHA insured loans. They have the same $275K loan limit for single family homes. Loans which are not backed by VA or FHA usually require PMI, private mortgage insurance unless you pay 20% down. The Homeowner's Protection Act (HPA) requires lenders to cancel PMI if you request it when the LTV (loan to value) reaches 80% and automatically when the LTV reaches 78% unless the lender classifies the loan as "high risk." PMI on "high risk" loans isn't cancelled until halfway through the loan, e.g. 15 years on a 30 year loan. Fannie Mae and Freddie Mac determine "high risk" for conforming loans. Private lenders determine "high risk" for non-conforming loans. HPA doesn't apply to loans originated before July 29, 1999.