Saturday, October 27, 2012

Overview of Real Estate Financing

Some of the major players in the housing financing system include the Federal Housing Administration,  the Veterans Administration, Ginnie Mae, Fannie Mae, and Freddie Mac.

FHA: created in 1934 to restore confidence in the mortgage market system, helped establish rigorous borrowing and lending standards that reduced lenders' risk and promoted use of long term, fully amortizing loans that were more consistent with household budgets than the interest only loans that were prevalent at the time.
Veterans Administration: began to guarantee mortgage loans on a large scale as a part of the so-called GI Bill of Rights, allowed veterans to obtain mortgage loans for home purchases with little or no down payment and low interest rates.
Ginnie Mae: organized as a vehicle for providing subsidized loans to borrowers through various FHA loan programs.
Fannie Mae: created to buy mortgages from lenders and to serve as a clearinghouse for the secondary mortgage market, originally established to operate a secondary market for FHA insured loans and provide FHA insured loans to low income borrowers in remote areas.
Freddie Mac: created to operate a secondary market for conventional loans similar to the one provided by Fannie Mae and Ginnie Mar for FHA and VA mortgages.

If you're looking for a job in real estate finance, there are numerous opportunities available to you. You can work with private mortgage insurers, mortgage bankers, mortgage brokers, commercial banks, and many others. Click this link to read a brief summary of different careers in real estate finance.


One topic that arises in real estate financing is foreclosure. In this article by CNN Money, states that foreclosures fell in 62% of major markets. Many see this as a sign that the housing market is starting to stabilize. The article argues that "most of the nation's housing markets are past the worst of the foreclosure problem."  

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