Fannie Mae - 2047 Words

Table of Contents Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..3 History†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..3 Business Method and Philosophy†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦4 Corporate Growth and Diversity.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦6 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...7 References†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦8 Figure Chart 1†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 Fannie Mae Fannie Mae is a leading mortgage company and one of the most financially successful businesses within its industry. Given the salient features of the organization that has culminated into its current standing, this report offers a brief but concise overview of the corporation. The organization began as a part of Roosevelt’s New Deal, a program†¦show more content†¦A community credit union is a financial cooperative operating to lend money to its members. The constituents of a mutual organization put money into a collective, where it may then be disbursed to members in need of loans, at agreeable rates and with good terms. By eliminating the need to turn a profit, mutual organizations are able to give lower rates on loans than traditional banking organizations. The sub-prime lenders are considered, in some instances, as a last resort since they tend to give loans to people with a very low credit scores or an otherwise extremely high risk of default. This type of lender offers loans at exorbitant interest rates as a way of covering losses from the high default rate they experience with their borrowers. Fannie Mae does not hold onto all of the purchased mortgages. It will take the individual loans and package them up with hundreds of others and market them as mortgage-backed securities (MBS) that it then sells to investors (for example, insurance companies, pension funds). Fannie Mae provides a guarantee to these investors that they will receive timely principal and interest payments, no matter what happens with the underlying mortgages. If there are large numbers of defaults, Fannie Mae will have to make the investors whole, utilizing tax dollars. Investors can also buy sharesShow MoreRelatedFannie Mae Fannie Freddie Mortgage Finance System1766 Words   |  8 PagesFannie and Freddie remain two of the largest financial institutions in the world, responsible for a combined $5 trillion in mortgage assets. The primary function of Fannie Mae and Freddie Mac is to provide liquidity to the nation’s mortgage finance system. Fannie and Freddie purchase home loans made by private firms (provided the loans meet strict size, credit, and underwriting standards), package those loans into mortgage-backed securities, and guarantee the timely payment of principal and interestRead MoreEssay about Fannie Mae Case1377 Words   |  6 PagesFannie Mae case. Federal regulators noted a growing string of high profile scandals at major U.S. corporations in recent years. The number of fraud cases investigated by the Securities and Exchange Commission jumped 41 percent in the last three years (112 cases in 2001 compare to 79 cases investigated in 1998), resulting in tens of millions of dollars in fines to settle the charges. I have decided to take a closer look at Fannie May. This company operates in the residential mortgage finance industryRead MoreFederal National Mortgage Association ( Freddie Mac )1034 Words   |  5 PagesIn 2008 two government sponsored enterprise (GSE), Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), received the second-largest bailout in the United States, totaling $187 billion. The bailout of Fannie Mae and Freddie Mac drew attention to the problems with too big to fail (TBTF) entities and government guarantees. The bailout highlighted the lack of market discipline and encouraged moral hazard. The erosion of the prerequisitesRead MoreAn Asset Price Bubble1286 Words   |  6 Pagesadvantage of the situation for benefiting in short run. 1.3 Fannie Mae and Freddie Mac Wallison and Pinto (2009) claimed that Fannie Mae and Freddie Mac have to take the responsibility for the lack of quality of mortgage (blemished credit, low or no down payments, negative amortization and the lack of documentation of income) that leads to the growth of the housing bubble. In 9 years (1994-2003), purchases of mortgages from Fannie and Freddie as a percentage of all mortgage originations increasedRead MorePennymac Loan Services Llc Financial Statement819 Words   |  4 Pagesmainly to gains in Mortgage Loans Held for Sale at Fair Value. Fannie Mae’s and Freddie Mac’s net worth requirement is a minimum net worth of $2.5 million plus 25 basis points of Unpaid Principal Balance (UPB) for total 1-4 unit residential mortgage loans serviced and a tangible net worth/total assets ratio greater than or equal to 6%. Ginnie Mae net worth requirement is equal to $2.5 million plus 0.35% of the issuer’s outstanding Ginnie Mae single-family obligations. As of all three year-end reportingRead MoreSubprime Mortgages And The Mortgage Crisis1546 Words   |  7 Pagesmortgage securities when they are issues. Other dealers in a secondary market sometimes redistribute securities. Mortgage securities are issued by the Government National Mortgage Association (Ginnie Mae), or by government-sponsored enterprises (GSEs) such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (Freddie Mac, 2002). Mortgage securities are often priced at a higher yield that corporate or Treasury bonds. The opportunities forRead MoreLoan Agencies And The Federal Housing Authority976 Words   |  4 Pagesgovernment introduced new laws and programs that would help people who have had their homes foreclosed or fell victim to a short sale,return to the buyer’s market. These people are called â€Å"boomerang buyers† in real estate terms. Loan agencies, such as Fannie Mae and Freddie Mac, have changed their guidelines to help boomerang buyers. The Federal Housing Authority has also assisted boomerang buyers by creating a program for people that have fell victim to the economic crisis. The option of renting to ownRead MoreKey Factors Affecting The Foreclosure Crisis1286 Words   |  6 Pagesthough Fannie Mae and Freddie Mac had not directly provided these types of no-down payment no-documentation loans, they had purchased them as an investment. As the defaults mounted and the losses grew, the value of Fannie’s and Freddie’s investments plummeted. Fannie Mae and Freddie Mac became insolvent not solely because the mortgages they guaranteed had defaulted; they suffered more because these investment portfolios became worthless. Turns out, while no one was looking Fannie Mae and FreddieRead MoreA Note On Subprime Loans1565 Words   |  7 Pagescalled mortgage-backed securities, which derive their value from mortgage payments and housing prices, greatly increased† (Subprime mortgage crisis). Pools of the loans were sold to federal government agencies like Ginnie Mae or a government sponsored-enterprise such as Fannie Mae or Freddie Mac. In the movie, The Big Short, McKay states, â€Å"In the end, mortgage-backed securities mutated into a monstrosity that collapsed the whole world economy† (McKay). Additionally, securitization was the process ofRead MoreSimultaneously, The Community Reinvestment Act (Cra) Of1320 Words   |  6 Pagesthem to Fannie Mae and Freddie Mac and others† (Wessel, 2009, p. 117). And when you can theoretically spread risk around, especially to government guaranteed enterprises, you’re much more likely to accumulate more and more of it because higher risk also theoretically leads to higher returns. â€Å"When half or more of the mortgages the GSEs bought had to be made to people below that [median] income level, it was inevitable that underwriting standards had to decline. And they did. By 2000, Fannie was offering