LEGAL ISSUES AND MORTGAGES

The USA government does not hand out mortgages but they have a few government programs and agencies that work in a way that’s related to mortgages. Lenders get most of their profit from points, fees, and various loan charges and therefore they’ll make more money if they can make more loans. Lenders will get cash when they sell their mortgages to the secondary market. Freddie Mac and Fannie Mae are the corporations that buy the largest number of home mortgages. These names are actually nicknames for the Federal Home Loan Mortgage Corporation and the Federal national Mortgage Association – each corporation is federally chartered and they each require lenders to meet certain requirements in order to be able to sell their loans. The Freddie Mac agency buys first and second mortgages and them sells them to investors in order to create money for lenders to provide new loans. The Fannie Mae corporation is privately owned, and is the biggest provider of financing for mortgages. Fannie Mae purchases first mortgages, sells them, which in turn provides money for lenders to create new loans.

The USA government funds a few mortgage programs such as FHA , VA, and FMHA mortgages. VA stands for the Department of Veterans Affairs which helps veterans and their partners buy homes. If you want to qualify for a VA loan you must provide proof of military service, complete a VA form, and have been honorably discharged 2 months or more. The Federal Housing Administration or FHA is insured but not given out by the USA government and provides easy credit qualifications, a down payment and different standards than the usual loans. In order to qualify for this loan you have to have good credit and enough money for the payments. The Federal Farmers Home Administration or FMHA provides mortgages that are financed and insured loans to farmers and people living in rural areas. The government subsidies this type of loan and distributes funds quarterly. To qualify the applicant has to have a low income, and the property has to be less than one acre.