One thing that they do is buy loans from originators that meet their criteria, and package them into bonds which are sold to investors.
They loan up to 95% LTV with a single loan, with mortgage insurance required on loans above 80%.
The limit was $417,000 with a minimum credit score of 620.
Around 2002, one of the ratings agencies came up with the silly assumption that borrowers with a 1st and 2nd (to avoid mtg ins) were no more risky than single loans, which was the mistake of the century. They foolishly took it one step further and allowed 20% 2nds creating 100% financing, which FNMA & FHLMC never allowed.
FNMA mission:
Fannie Mae provides stability, liquidity, and affordability to the nation’s housing finance system under all economic conditions. We are a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market.
Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. Our job is to help those who house America.
Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America.
The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world.
Fannie Mae has a unique duty to the public it serves — and the private investors that fuel its service — to be a model company focused on service, reliability, and value.
Like all who participate in the housing market, Fannie Mae has a responsibility to help home buyers, homeowners, and communities through market challenges. We believe in the long term health of America’s housing market. The nation is growing and that growth will bring a renewed demand for housing and for responsible, sustainable mortgage lending. Fannie Mae will be there to help meet America’s changing housing needs.
