Behind The Scenes Information on Mortgage Loans
It seems similar to the activity regarding mortgage loans goes on nowadays. If you're not actually part of the monetary organizations you probably have never heard of a few of the following. The money from mortgage loans travels in one institute to another and back again. The common borrower is never made conscious of the happenings that turn the big wheel associated with finances. The three big institutions involved in supplying funds for these transactions are Freddie Mac, Ginnie Mae, as well as Fannie Mae.
One of the activities that are the main system is "mortgage backed securities. " What the three "big three" do using the pools they purchase is they break them into smaller parcels. There is little risk in these smaller parcels because each loan is just a small part of a larger security. These securities are then in love with Wall Street as safe investments with higher rates of interest than bonds. Ginnie Mae bonds are securities which are backed by the mortgages on FHA and VA loans and through the selling of the bonds, the big three obtain new monies to buy pools so lenders can get more money in order to lend to new borrowers. Are you getting light headed yet? The money just goes round and circular.
The majority of your monthly mortgage payment is received through the investor while the servicer gets to keep an extremely small portion but since they work on this type of grand scale they are handling billions of home loan dollars. The money continues to move around in the investor back to the institutional investor. This institutional investor is generally involved in mortgage backed securities. Your particular loan may maneuver around from company to company without you even understanding it. They all just want to service the loan because that's in which the money is. No one is actually trying to buy any loans.
There are certain types of loans which are the exception to the rule. They do not come under the guidelines of Fannie Mae or Freddie Macintosh. These are very large loans which is why they're called "jumbo" loans. There are different pools and investors for these types of large loans and Freddie Mac and Fannie Mae aren't involved. But the rest of the procedures are just like for the smaller loans. They are securitized and usually sold as mortgage back securities combined with the others. All of these transactions add up to "mortgage banking" and also the backbone of the mortgage business and consists of this buying and selling of mortgages and home loan backed securities.
One of the activities that are the main system is "mortgage backed securities. " What the three "big three" do using the pools they purchase is they break them into smaller parcels. There is little risk in these smaller parcels because each loan is just a small part of a larger security. These securities are then in love with Wall Street as safe investments with higher rates of interest than bonds. Ginnie Mae bonds are securities which are backed by the mortgages on FHA and VA loans and through the selling of the bonds, the big three obtain new monies to buy pools so lenders can get more money in order to lend to new borrowers. Are you getting light headed yet? The money just goes round and circular.
The majority of your monthly mortgage payment is received through the investor while the servicer gets to keep an extremely small portion but since they work on this type of grand scale they are handling billions of home loan dollars. The money continues to move around in the investor back to the institutional investor. This institutional investor is generally involved in mortgage backed securities. Your particular loan may maneuver around from company to company without you even understanding it. They all just want to service the loan because that's in which the money is. No one is actually trying to buy any loans.
There are certain types of loans which are the exception to the rule. They do not come under the guidelines of Fannie Mae or Freddie Macintosh. These are very large loans which is why they're called "jumbo" loans. There are different pools and investors for these types of large loans and Freddie Mac and Fannie Mae aren't involved. But the rest of the procedures are just like for the smaller loans. They are securitized and usually sold as mortgage back securities combined with the others. All of these transactions add up to "mortgage banking" and also the backbone of the mortgage business and consists of this buying and selling of mortgages and home loan backed securities.