[yardie]

Just a nitpick, your mortgage isn't secured by the government. It's actually owned by the government, Fannie Mae. Your bank is just the middle man that services it. If your bank doesn't want to service it or the government don't think they are managing it correctly they will move it to another bank.

So I'm not surprised these banks don't want to touch jumbo loans right now. That debt is their risk. They can't wash their hands of it if it goes tits up.

[fatnoah]

>So I'm not surprised these banks don't want to touch jumbo loans right now. That debt is their risk. They can't wash their hands of it if it goes tits up.

I'm in the middle of a refi w/large national bank and my broker mentioned he's not really writing jumbos except for refis for current customers.

[oldsklgdfth]

> your mortgage isn't secured by the government. It's actually owned by the government, Fannie Mae.

I'm confused what type of mortgages does this apply to? Is a conventional 20% down mortgages owned by the government somehow?

[yardie]

Conventional, FHA, and VA loans are owned by the government.

This came about after 2009 financial crisis, once regulators realized the banks were playing fast and loose with mortgage lending. Unlike TARP, they inherited that debt and have held onto ever since.

[oldsklgdfth]

This is total news to me. So is the US housing industry owned by the US government?

My impression was:

- conventional is within risk margins of banks and they own that risk

- fha requires pmi, that is insurance you buy to cover the extra bank risk

- va, mortgages to veterans that the government own

[yardie]

They don't own all of it, but they own the majority of what most people consider mortgages. The high-priced homes in NYC, LA, SF are more commonly jumbo loans. These are considered non-conforming and Fannie Mae can't touch 'em. The 3 you listed are conforming loans and will be absorbed by FannieMae/FreddieMac.

In my case, 30 days after we closed on a conventional loan, the bank sent us a letter stating the loan was transferred to Fannie Mae. They would continue to do the servicing of taking payments, collections, and closing for the next 30 years, hopefully. But SOP is close on the loan and send it to FannieMae.

The old days when you would closed the loan the bank would immediately package it and shop it around. Prior to the financial crisis your loan would constantly be moving around as if it was being traded on Wall Street, which it was. People were sending checks to banks that didn't even hold the loan.

[oldsklgdfth]

> In my case, 30 days after we closed on a conventional loan, the bank sent us a letter stating the loan was transferred to Fannie Mae

I don't think that happened to me, the bank kept taking my money so I assumed the owned the house that I was paying them back for.

> The old days when you would closed the loan the bank would immediately package it and shop it around

This is probably mortgages 101, but why was that the case? Is it, in general, more favorable to sell off mortgage liabilities or where there conditions that made that true?

[nitrogen]

Your "servicing" and "note" on a mortgage are two different things. The servicing right is who gets to interact with you and charge you money, but the owner of the note actually gets the money in the end (minus servicing costs). Those can be transferred independently, so you may keep sending checks to one place, but the actual owner may change over time.

One reason to sell a mortgage is to get the money back. Instead of making money slowly over 30 years, you get some fraction of that as a lump sum plus your principal is returned. Some investors want the steady payout for more, others want fast turnover for less.

[redis_mlc]

Conceptually, after 2008, the US government basically backstops everything financially.

There never was a return to the markets as pre-2008, meaning there never was a recovery.

[nsfyn55]

I'm not familiar with what changes occurred during the financial crisis. Fannie Mae and Freddie Mac always enjoyed an implicit guarantee that their balance sheets were secured by the federal government. It was a big inside joke forever.

[oldsklgdfth]

TIL, after some deep diving, it appears to me that the government plays a pretty significant role in US housing, not isolated to affordable low-income housing.

[naveen99]

Fannie Mae repackages some of the mortgages and sells them back On the market also as credit risk transfers. https://www.fanniemae.com/portal/funding-the-market/credit-r...

[nsfyn55]

> It's actually owned by the government, Fannie Mae.

Oh my bad. So riddle me this. Does the government secure mortages it owns?

[yardie]

I'm not sure what the relationship is, because all government loans are secured by the federal government. In this case there is a lot more oversight. And the government has put more restrictions on how loans are packaged. Investors and lenders were playing a lot of games in the early 00s, taking advantage of securitization with almost no oversight.