© 2009 Fannie Mae Do You Need to Sell Some Loans? Secondary Mortgage Market Resources North...

© 2009 Fannie Mae

Do You Need to Sell Some Loans?

Secondary Mortgage Market ResourcesNorth Carolina Affordable Housing Conference Raleigh, NCNovember 3-4, 2009Presented by:Miles O. VaughnFannie Mae

November 2009 | Secondary Mortgage Market Resources 2

The Housing Finance Market

Where all activities related to the origination, sale, securitization, and servicing of residential mortgages takes place.

Two components:1. Primary Mortgage Market

2. Secondary Mortgage Market


Primary Mortgage Market

Mortgages are originated and funds loaned directly to borrowers

Some key players: Commercial Banks Credit Unions Mortgage Companies Housing Finance Agencies (i.e. North Carolina

Housing Finance Agency)


Secondary Mortgage Market

Market where residential mortgages and mortgage-backed securities (MBS) are bought and sold

Mortgage-backed securities are pools of mortgages with similar features bundled into an investment instrument (securitization)

Some key players: Fannie Mae Freddie Mac Ginnie Mae Pension Funds Commercial Banks


Housing Finance Market Dynamics

Borrowers(Pay Mortgages)

Lenders/Originators(Banks, HFA, S&L’s, Credit Unions, etc.)

Fannie Mae, Freddie Mac, FHLB

Capital MarketsPension Funds,

Investors


Fannie Mae’s History

Created in 1938 to help combat the adverse effects of the Great Depression, including:

High unemployment Massive bank closures Tightening of availability of mortgage financing

Fannie Mae’s mission is to provide stability, liquidity and affordability to the U.S. housing and mortgage markets, in good times and bad.


How Fannie Mae Provides Liquidity

Fannie Mae provides liquidity in two ways:

1. We purchase mortgages from lenders We then hold these mortgages in our portfolio

We provide cash to lenders so they can fund additional mortgages

In order to finance the mortgages we purchase, we issue debt securities to capital market investors

(continued)


2. We issue mortgage-backed securities (MBS) Pool the loans from lenders and bundle into MBS MBS are owned by lenders and are backed by the

underlying mortgages MBS are very liquid and lenders can sell them or hold

them Fannie Mae guarantees timely payments of interest and

principal of MBS Fannie Mae earns a guarantee fee

How Fannie Mae Provides Liquidity (con’t)


Fannie Mae’s Key Business Groups

Capital Markets - Purchases and sells our portfolio mortgage loans, MBS, and other mortgage-related securities

Single-Family Mortgage Business - Offers our lender partners mortgage products and services that helps borrowers buy and keep their homes

Housing and Community Development - Works with housing partners to help stabilize and expand supply of affordable and market-rate rental housing


Benefits to Borrower

Insures steady stream of funding is available

Allows for competitiveness in mortgage rates

New technologies that make buying a home quicker, easier, and less expensive


Existing Home Sales Rise With Affordability


Fannie Mae Serves the Market Every Day

Liquidity Issuing MBS Buying loans

Stability Refinancing and modifying mortgages Preventing foreclosures

Affordability Financing loans with low interest rates


With Support To Do the Job

Government investment: Up to $200 billion in fundingLiquidity backstop through 2009

Fed pledge to purchase up to:$1.25 trillion in GSE-issued MBS$200 billion in GSE housing-related debt


Contact Information

Miles O. Vaughn

Senior Business Developer

Fannie Mae

112 South Tryon Street, Suite 1100

Charlotte, N.C. 28284

[email protected]

(704) 344-6964

mailto:[email protected]

© 2009 Fannie Mae Do You Need to Sell Some Loans? Secondary Mortgage Market Resources North...

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