Fannie Mae Loan Updates

Jumbo Mortgage Refinance Loans offers both conforming and non conforming home loans as outlined by Fannie Mae. Borrowers who need home loans for amounts that exceed $417,000 must qualify for a non-conforming loan, otherwise known as a jumbo mortgage.

As reported, Fannie Mae announced that its 2007 maximum conforming mortgage loan limits would continue at the 2006 limits. Loan limits for single-family mortgages purchased by Fannie Mae will continue to start at $417,000 for 1-unit properties for most of the U.S. Limits for multi-unit loans for 2007 will be as follows: 2-family loans $533,850, 3-family loans $645,300, and 4-family loans $801,950. The 2007 loan limit for second mortgages will be $208,500.

The maximum amounts for 1-4 family mortgages and second mortgages in Alaska, Hawaii, Guam and the U.S. Virgin Islands are 50 % higher than the limits for the rest of the country. Most home loans Fannie Mae purchases are lower than the conventional limit.

Fannie Mae announced the next scheduled dividend rate adjustment for its Variable Rate Non-Cumulative Preferred Stock Series O. The new rate will be 7.515% per annum.

The new rate for Series O Preferred Stock is equal to the greater of 7.000 % or the sum of the ten-year Constant Maturity Treasury (10-year CMT) rate plus 2.375 %. The 10-Year CMT is the one-week average yield on 10-year United States Treasury securities at "constant maturity" as estimated from the United States Treasury's weekly yield curve and published in the latest (June 25, 2007) Federal Reserve Statistical Release of H.15 (519) Selected Interest Rates.

The new dividend rate for Series O will be in effect from and including June 30, 2007, to but excluding September 30, 2007. Holders of record of Series O preferred shares will be entitled to quarterly dividends when and if declared by the Board of Directors of Fannie Mae.

The shortcomings of Fannie Mae have been overlooked on the basis that Fannie plays a critical role in driving the housing sector, and thus the American economy. In a country where a common dream is owning a home, Fannie Mae offers a bridge to the road of owning a home.

Fannie Mae (FNMA or Federal National Mortgage Association), a government-sponsored enterprise (GSE), finances one of every five home loans in the United States. In 1938 this GSE was founded by the federal government with a mission to increase home ownership across the United States. It is subject to congressional oversight via the Office of Federal Housing Enterprise Oversight (OFHEO). Fannie Mae stock (FNM) is actively traded on the New York Stock Exchange and is part of the Standard & Poor's 500 Composite Stock Price Index.

Fannie Mae may be one of the most ill-fated welfare creations, ever, on the part of the United States government. In the beginning, Fannie Mae's impact was negligible, however, from the outset there were plans to swell Fannie's waistline by expanding her purchasing authority. At about the time the American soldiers were coming home from WWII, Fannie was enabled to purchase loans guaranteed by the Veterans Administration, in addition to the Federal Housing Administration-insured mortgages it was already purchasing. This creation and expansion of a secondary market for mortgages was a vital boost to the supply of lendable money in the United States

The notion of a "right" to home ownership by means of government subsidies is so firmly entrenched in the American mindset that Fannie could only grow — and grow she did. In 1968, as a part of Lyndon Johnson's societal engineering agenda, Fannie was converted into a private corporation and the ability to guarantee government-issued mortgages was switched from Fannie to the federal government's newest creation, Ginnie Mae (Government National Mortgage Association). This meant that Fannie would begin to operate with private capital on a self-sustaining basis. Fannie was growing up, and she was going on to bigger and better things.

In 1970, Richard Nixon authorized Fannie Mae to purchase conventional mortgages, launching a national secondary market for home mortgages. As Fannie's foray into the conventional mortgage market began to surge upward, in the 1980s it began to purchase second mortgages and adjustable-rate mortgages, and it also commenced its mortgage-backed securities scheme.

Fannie Mae advertises itself as "a shareholder-owned company with a public purpose." True to its words, in January of 2000 Fannie introduced its "Mortgage Consumer Bill of Rights" program. This rundown of entitlements promised the consumer the "right" to access credit and the "right" to qualify for the lowest-cost mortgage possible. No de facto private corporation can or will guarantee any consumers' rights.

Fannie is a very willing lender with the power of prominence behind it. Its GSE status allows it to get away with not maintaining the necessary underlying capital and enables Fannie to borrow on more favorable terms than its state-chartered competitors. In addition, Fannie Mae is exempt from paying state or local income taxes and from filing with the Securities & Exchange Commission (SEC).

Because Fannie and Freddie can borrow at a subsidized rate, they have been able to pay higher prices to originators for their mortgages than can potential competitors and to gradually but inexorably take over the market for conforming mortgages. This process has provided Fannie and Freddie with a powerful vehicle and incentive for achieving extremely rapid growth of their balance sheets.

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