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Archive for the ‘Real Estate’ Category

Who pay for the “Guarantee”? Have you?

Posted by Kelly Chung on January 7, 2009

Fannie Mae and Freddie Mac make loans and loan guarantees as well as handle the secondary mortgage market in the US. The other way Fannie and Freddie made money was when they began to repurchase their own mortgage-backed securities and to buy similar securities that were created by Wall Street without the G.S.E. guarantee, and hold them in a portfolio.  Fannie and Freddie pocked the difference – between what the mortgages yielded and the companies’ own cost of borrowing funds.

The mortgage-backed securities issued by Freddie Mac, Fannie Mae, and Ginnie Mae carry payment guarantees that transfer much of the default risk of these agencies. Freddie Mac guarantees the timely payment of interest on its Participation Certificates and also guarantees the ultimate payment of principal on the underlying residential mortgage loans by no later than the just ultimate payment of principal on the underlying residential mortgage loans by no later than the stated final payment date. It guarantees the timely payment (rather than just ultimate payment) of principal and interest on what are called its Gold Participation Certificates.

Fannie Mae guarantees the timely payment of interest and principal on its Guaranteed Mortgage-Backed Securities. The mortgages underlying the Ginnie Mae securities are either insured by the FHA or guaranteed by the U.S. Department of Veterans Affairs. Freddie Mac will receive a $13.8 billion cash injection from the government. Freddie Mac experienced heavy losses as its portfolio of mortgage securities  including risky sub-prime-backed securities. The securities lost value due to more borrowers fell behind or defaulted on mortgages.

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Buying Foreclosures from Federal, State, and Local government agencies

Posted by Kelly Chung on January 7, 2009

Federal, State, and local governments have a variety of residential, commerical and industrial foreclosed properties in their inventories.
1/ GSA = Government Services Administration Property Disposition Offices oversee the sale of real estate.  The list includes office buildings, vacant land, high-rise buildings… website: GSA.gov
2/ HUD = FHA = The U.S. Department of Housing and Urban Development foreclosures occur when a borrower defaults and the lender forecloses on an FHA loan.
3/ VA = Veterans Administration repossesses property from a serviceman who has been foreclosed on.
4/ FDIC = The Federal Deposit Insurance Corp is an independent agency of the U.S. governments.  The website:  FDIC.gov
5/ Freddie Mac = Federal Home Loan Mortgage Corp is publicly chartered agency that buys residential mortgages from lending institutions.  Freddie Mac sells its foreclosures through real estate brokers who manage the properties in each sate.
6/  Fannie Mae = Federal National Mortgage Association is the largest purchaser of mortgage in the secondary market.  Fannie Mae hires real estate brokers to sell the foreclosures in its inventory. Go to: Fanniemae.com

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Refinancing

Posted by Kelly Chung on January 7, 2009

A refinance mortgage is a financing of a property in which property ownership is not transferred. A refinance mortgage pays off existing mortgages and may even return equity (cash out) to the owner of the property. There are three main reasons why you might want to refinance your home mortgage:

1/ Saving money by paying lower interest rates 2/ Borrowing more money 3/ Changing from one type of mortgage to another

Should you refinance? You must know your current mortgage rate and amount, the mortgage rate for a new loan and your approximate refinancing costs. And ask yourself how long you plan to stay in your home. The largest cost item in refinancing are the points and other fees charged by your lender. Those fees generally range from 1% to 4.5% of your mortgage amount.
For example, the old mortgage rate is 10 percent. The new mortgage rate is 8%. The estimated refinancing costs are about $2300. The annual interest savings by using refinancing are about $1700.  Therefore, it takes a year and 4 months to recover the costs of refinancing. Th savings over 30 years would be $36,000. Lowering your interest rate by as little as 1 percent can save you thousands of dollars.  A prepayment penalty is a hidden cost of refinancing. A typical prepayment penalty might charge from 1% to 3% of your loan amount if you repay your loan less than 3 years. If it does, you may want to wait until the prepayment penalty period is over before refinancing. Check with your mortgage broker.Refinancing

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