Mortgage Consumer Bill of RightsWritten by Syd Johnson
This bill of rights was laid out by Franklin Raines, President of Fannie Mae on January 15, 2000. The Mortgage Consumer Bill of Rights is a pledge of $2 trillion over 10 years to help consumers gain access to home ownership. It also includes an “Open Book” approach to underwriting where customers can see all of factors that go into evaluating their creditworthiness and process of applying for a home loan. One of most ambitious parts of this plan is to bring more technology to Mortgage Industry and reduce their paperwork by over 17%. Less reliance on paper, equals more automated evaluations and quicker loan approvals. This means customers who look for lenders and apply online are definitely at forefront of Mortgage industry. The Basic Tenets of Mortgage Consumer Bill of Rights All Americans Have A Right to Access to Mortgage Credit Fannie Mae hopes to decrease gap in home ownership between whites and blacks, low income earners and middle class families, and other underserved populations. There are more procedures and practices in place to prevent predatory lending, fraud and discrimination. You can be assured that you can find a lender that will approve and finance your loan even if you are not extremely wealthy or you don’t have perfect credit. Consumers have a right to lowest-cost mortgage for which they qualify. Fannie Mae is chartered as a private company to hold down costs of mortgages. Their strategy is to offer mortgage products that allow lenders to qualify more home buyers for low cost conventional financing. There are mortgage programs to allow lenders to serve needs of first time home buyers, women, minorities, rural and inner city residents, singles and more. One of their most popular packages is Timely Rewards Program. If you have less than ideal credit, you can qualify for mortgage rates that are up to 2% lower than sub-prime market, and rate can be reduced another 1% if you make all of your loan payments on time for first 24 months.
| | Secondary Mortgage Market Sets the Standards and Practices for Mortgage LendingWritten by Syd Johnson
The Secondary Mortgage Market is responsible for setting many of rules and common practices that determines who gets a home loan. The secondary market includes Fannie Mae (Federal National Mortgage Association or FNMA), Freddie Mac (Federal Home Loan Corporation or FHLMC), Ginnie Mae (Government National Mortgage Association or GNMA) and a variety of other investment oriented institutions.These institutions set standards because they are ones that will often buy and service your home loan after you have purchased your property. Although your lender handles all of your initial paperwork, there are several well established steps to take your Mortgage out of their hands and into secondary market where additional fees, manpower and time that will be invested in servicing your home loan for a typical period of 15 to 30 years. They Lend Money to Your Lender Once your lender sells you home loan on secondary market, it frees up money to make another loan to another consumer looking to purchase their own property. It’s an intricate revolving system that was set up after depression and refined after massive Savings and Loans scandals in 1980’s. It prevents your Mortgage Lender from running out of available cash when they approve lots of loans and assures you that each loan application gets a fair review regardless of type, size and geographic location of your lender.
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