Finance
Secondary Mortgage Market Makes American Housing In the early 1900s, loans to buy a home were 3- or 5-year adjustable-rate balloon mortgages, which meant you paid interest for those first three to five years and then paid the full amount of the loan. Your options were either pay your lender for the remaining loan amount in cash or refinance your home into
another balloon mortgage. In those days, all of lending was local, meaning the interest rates, loan terms, and source of money was specific to where you lived. When our country went through the Great Depression, nearly one in four homeowners lost their homes to foreclosure as they couldn’t pay for their mortgage loans without a job. Lenders stopped offering
Today, Fannie Mae and Freddie Mac are the largest buyers of conventional mortgage loans, which can be as high as $548,250 for a single-family home in 2021.
-Paul Barretto
mortgage loans as they didn’t have any money to lend. This created a national housing crisis and had a damaging effect on the economy. In 1938, Congress created the secondary mortgage market when they formed the Federal National Mortgage Association, also known as Fannie Mae. Its sole purpose was to buy mortgage loans from the Federal Housing Administration (FHA) and the Veterans Administration (VA). This allowed lenders to offer mortgage loans to their borrowers regardless of the economic environment, make money, and pass the risk of non-payment to Fannie Mae. This arrangement created a reliable, steady source of funding for housing and introduced long term fixed rate mortgage loans, national interest rates, and affordable housing programs.
Do you have a solid
EXIT STRATEGY ? ROC USA brings motivated buyers and ready, specialized financing to the closing table. Our track record is unmatched and our process is effective, efficient, and confidential until you say the word. And we’ll stick by your longtime customers to ensure the neighborhood you built continues to thrive.
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Contact us today for a confidential conversation. 603-545-1704 rocusa.org
