Welcome or Register

The "Double Agent" Judy Hall, REALTOR®, ABR, REBAC, SRES
RE/MAX All Stars Realty
1225 Roanoke Rd
P. O. Box 39
Daleville, VA 24083
Home Office: 540-473-3066
Text: 540-309-9244
Home Office Fax: 540-473-2814 
Email: judy@judyhall.com
Website: www.JudyHall.com
Back to Table of Contents

Where Does the Money Come From for Mortgage Loans?

In the olden days, when someone wanted a home loan they walked downtown to the neighborhood bank or savings & loan. If the bank had extra funds lying around and considered you a good credit risk, they would lend you the money from their own funds.

It doesn’t generally work like that anymore. Most of the money for home loans comes from three major institutions:

  • Fannie Mae (FNMA - Federal National Mortgage Association)
  • Freddie Mac (FHLMC - Federal Home Loan Mortgage Corporation)
  • Ginnie Mae (GNMA - Government National Mortgage Association)

This is how it works:

You talk to practically any lender and apply for a loan. They do all the processing and verifications and finally, you own the house with a home loan and regular mortgage payments. You might be making payments to the company who originated your loan, or your loan might have been transferred to another institution. The institution where you mail your payments is called the servicer, but most likely they do not own your loan. They are simply servicing your loan for the institution that does own it.

What happens behind the scenes is that your loan got packaged into a pool with a lot of other loans and sold off to one of the three institutions listed above. The servicer of your loan gets a monthly fee from the investor for servicing your loan. This fee is usually only 3/8ths of a percent or so, but the amount adds up. There are companies that service over a billion dollars of home loans and it is a tidy income.

At the same time, whichever institution packaged your loan into the pool for Fannie Mae, Freddie Mac, or Ginnie Mae, has received additional funds with which to make more loans to other borrowers. This is the cycle that allows institutions to lend you money.

What Freddie Mac, Ginnie Mae, and Fannie Mae may do after they purchase the pools is break them down into smaller increments of $1,000 or so, called mortgage-backed securities. They sell these mortgage-backed securities to individuals or institutions on Wall Street. If you have a 401K or mutual fund, you may even own some. Perhaps you have heard of Ginnie Mae bonds? Those are securities backed by the mortgages on FHA and VA loans.

These bonds are not ownership in your loan specifically, but a piece of ownership in the entire pool of loans, of which your loan is only one among many. By selling the bonds, Ginnie Mae, Freddie Mac, and Fannie Mae obtain new funds to buy new pools so lenders can get more money to lend to new borrowers.

And that is how the cycle works.

So when you make your payment, the servicer gets to keep their tiny part and the majority is passed on to the investor. Then the investor passes on the majority of it to the individual or institutional investor in the mortgage backed securities.

From time to time your loan may be transferred from the company where you have been making your payment to another company. They aren’t selling your loan again, just the right to service your loan.

There are exceptions.

Loans above $333,700 do not conform to Fannie Mae and Freddie Mac guidelines, which is why they are called non-conforming loans, or “jumbo” loans. These loans are packaged into different pools and sold to different investors, not Freddie Mac or Fannie Mae. Then they are securitized and for the most part, sold as mortgage backed securities as well.

This buying and selling of mortgages and mortgage-backed securities is called mortgage banking, and it is the backbone of the mortgage business.

Back to Table of Contents

DON'T MISS A NEW LISTING AGAIN!

Register Now
Already registered? Login

FREE AUTOMATED EMAIL UPDATES
Sign up/Login to take advantage of all this site has to offer. Save your favorite listings and searches – also receive email updates when listings you like come on the market for free!
*Contact Information is NOT Shared!*

Testimonials

Judy is very knowledgeable, dependable, and just plain GREAT to work with. I highly recommend her based upon 2 house purchases through her and one house sale with her. Jeanne W.
Could not be happier with the job Judy and Richard did for me! I was so pleased when I bought a house through them, I used them again when I sold my house! Judy Hall Double Agent gets a score of A++++! Wilma K.
Richard and Judy have helped us on both sides of the equation. They helped us on TWO of our home purchases and ONE of our home sales. They helped make the sale of our home in short order at a reasonable price and they helped us settle on a pleasing purchase price for our current home. Both Richard and Judy are superb professionals. Jay R.
Judy has been in the real estate business since 1985 and knows her stuff. If you want an agent who will be there to protect your interests, look no further. She is an "i dotting" and "t crossing" kind of person who will make sure that your contract is binding and will cover everything you have required. In today's market, real estate can be tricky and you need someone who will get the job done, and right the first time. Tam H.
View All

Each RE/MAX® Office is Independently Owned and Operated.
Licensed in Virginia.
Information Provided by Seller is Deemed Reliable, but Not Guaranteed.

  mls 

Real Estate Websites by iHOUSEweb iconiHOUSEweb | Admin Menu