Federal home loan
Federal home loan Mortgage Corporation was organized specifically to provide a secondary mortgage market for the United States savings associations and thrifts that are members of the federal home loan bank system .
Federal home loan Mortgage Corporation was given the authority to raise additional funds by floating its own securities, which were backed by pools of its own mortgages .
Federal home loan Mortgage Corporation is empowered to purchase conventional loans, as well as federal housing administration insured and guaranteed loans, from lenders all over the country . It also accepts convertible mortgages, loans established at an adjustable rate that may be changed to a fixed rate . Its commitments to purchase are issued at designated discounts and specific interest rates for various types of mortgages, with fees charged accordingly . It buys loans for its own pools to collateralize its participation certificates, which in turn, it guarantees to the security buyers.
Federal home loan Mortgage Corporation provides its own electronic underwriting service, called loan prospector, to participating lenders, mortgages insurers, mortgage bankers and brokers, and others in the real estate market .
The loan prospector computer program evaluates a borrowers creditworthiness using statistical models and judgmental rules. The credit evaluation indicates the level of underwriting and documentation necessary to determine the investment quality of a loan . It includes the borrowers credit reputation and financial capacity as well as the estimated value of the property . The credit analysis uses information from the loan application and credit searches . The value of the property is derived from statistical models or from a traditional appraisal .
Loan prospector provides an assessment of a loans risk profile and estimates accurate pricing commensurate to the risk.A jumbo loan is a mortgage exceeding Federal home loan Mortgage Corporation conforming loan limits . A sub-prime loan is a mortgage that does not meet Federal home loan Mortgage Corporation investment quality standards .
Federal home loan Mortgage Corporation also offers hundred percent mortgages that requires no down payment but does require that the borrowers have excellent credit and funds of the sales price to cover closing costs . All of Federal home loan Mortgage Corporation programs are described in great detail on the web site.
Federal home loan Mortgage Corporation has instituted a new credit standard for qualifying loan applications called the gap ratio ;it offers a valuable test for consumers anticipating buying a home or applying for a mortgage . The gap ratio is the different between the applicants monthly debt payment to income ratio and the monthly housing expense to income ratio . The new standard suggests that the gap between these two debt ratios generally should not exceed fifteen percentage points. This places greater emphasis on an applicants current credit card balance, auto loan payments, student loans, and other revolving credit payments .
Other Articles
