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Do You Need to Sell Some Loans? Secondary Mortgage Market Resources

Do You Need to Sell Some Loans? Secondary Mortgage Market Resources. North Carolina Affordable Housing Conference Raleigh, NC November 3-4, 2009 Presented by: Miles O. Vaughn Fannie Mae . The Housing Finance Market.

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Do You Need to Sell Some Loans? Secondary Mortgage Market Resources

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  1. Do You Need to Sell Some Loans?Secondary Mortgage Market Resources North Carolina Affordable Housing Conference Raleigh, NCNovember 3-4, 2009Presented by:Miles O. VaughnFannie Mae

  2. The Housing Finance Market Where all activities related to the origination, sale, securitization, and servicing of residential mortgages takes place. Two components: • Primary Mortgage Market • Secondary Mortgage Market November 2009 |Secondary Mortgage Market Resources 1

  3. 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) November 2009 |Secondary Mortgage Market Resources 2

  4. 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 November 2009 |Secondary Mortgage Market Resources 3

  5. Borrowers (Pay Mortgages) Fannie Mae, Freddie Mac, FHLB Capital Markets Pension Funds, Investors Lenders/Originators (Banks, HFA, S&L’s, Credit Unions, etc.) Housing Finance Market Dynamics November 2009 |Secondary Mortgage Market Resources 4

  6. 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. November 2009 |Secondary Mortgage Market Resources 5

  7. 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) November 2009 |Secondary Mortgage Market Resources 6

  8. How Fannie Mae Provides Liquidity (con’t) 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 November 2009 |Secondary Mortgage Market Resources 7

  9. 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 November 2009 |Secondary Mortgage Market Resources 8

  10. 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 November 2009 |Secondary Mortgage Market Resources 9

  11. Existing Home Sales Rise With Affordability November 2009 |Secondary Mortgage Market Resources 10

  12. 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 November 2009 |Secondary Mortgage Market Resources 11

  13. With Support To Do the Job • Government investment: • Up to $200 billion in funding • Liquidity backstop through 2009 • Fed pledge to purchase up to: • $1.25 trillion in GSE-issued MBS • $200 billion in GSE housing-related debt November 2009 |Secondary Mortgage Market Resources 12

  14. Contact Information Miles O. Vaughn Senior Business Developer Fannie Mae 112 South Tryon Street, Suite 1100 Charlotte, N.C. 28284 Miles_o_vaughn@fanniemae.com (704) 344-6964 November 2009 |Secondary Mortgage Market Resources 13

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