You may have heard of Fannie Mae and Freddie Mac. What are they, and how do they affect mortgages?
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are Government Sponsored Enterprises (GSE). They are quasi-governmental entities that were established to enhance the flow of credit in the housing industry. They purchase mortgages from lenders in the secondary mortgage market and purchase the majority of the conforming loans (i.e. loan amounts $453,100 and less).
As such, mortgages are underwritten to their guidelines. The guidelines between the two entities can differ. Fannie Mae could approve some loans, while Freddie Mac would approve other loans. Some lenders sell only to one entity, so they underwrite to their guidelines. Thus, some loans could get denied by a lender that underwrites only to one of these entities, but if sent to another lender could get approved if underwritten to the other entity’s guidelines.
As a mortgage broker, we have access to both Fannie Mae and Freddie Mac lenders. We know up front whether the loan should be underwritten to Fannie Mae or Freddie Mac guidelines, and will direct the loan to the proper lender.
When it comes to getting a loan approved, contact us and we can help.
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Counsel Mortgage Group®, LLC
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