Since many home mortgages went into forbearance due to economic hardship amid the COVID-19 pandemic, homeowners may not know who owns their loans. Mortgage lenders sell most of their home loans to government-sponsored enterprises Fannie Mae and Freddie Mac.
In April, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac would start buying mortgages going into forbearance just after closing.
Do I have a Fannie Mae loan?
If you’re a homeowner and you don't know who owns your loan, you can contact your mortgage company to find out directly. Another way is to use the loan lookup tools for either Fannie Mae or Freddie Mac and check your loan there.
Often, homeowners aren’t even notified when their home loans are bought by Fannie Mae because they don’t need to interact with the company.
Why did Fannie Mae buy my mortgage?
Fannie Mae and Freddie Mac buy about half of all mortgages made by lenders. If your mortgage has been purchased by Fannie Mae, it may be because your loan recently entered forbearance. Fannie Mae and Freddie Mac, government-created organizations, started buying mortgages that had just gone into forbearance due to pandemic-related hardship.
In April, Mark Calabria, the FHFA director, said, “Purchases of these previously ineligible loans will help provide liquidity to mortgage markets and allow originators to keep lending.”
Is Fannie Mae a conventional loan?
Fannie Mae loans are considered conventional loans. As a result, they aren't insured or guaranteed by a government agency, according to RocketMortgage.
For a first-time homebuyer, an FHA (first-time homebuyer) loan can be a good option because the credit standards are easier to meet than conventional loans. Someone can qualify for FHA financing with as low as a 500 credit score. To qualify for a Fannie Mae loan, a homebuyer generally needs a minimum 620 credit score, according to NerdWallet.
Are Fannie Mae loans good?
Fannie Mae has existed since 1938. Originally, the company was created as the Federal National Mortgage Association. In 1968, Congress privatized Fannie Mae and made it a shareholder-owned company funded by private capital.
Fannie Mae and Freddie Mac buy mortgages from lenders to either hold in their portfolios or repackage within mortgage-backed securities.
Fannie Mae loans provide benefits to society as a whole by providing liquidity, or readily available funds, which makes mortgages affordable and accessible to more people. By purchasing mortgages from lenders, it frees up funds from lenders to be able to provide more loans to individuals and investors.
For prospective homeowners, it’s more difficult to qualify for a Fannie Mae loan than an FHA loan. There are benefits to borrowers including lower down payment options and favorable interest rates. Also, if you qualify for a conventional mortgage loan with Fannie Mae or Freddie Mac, lenders prefer to approve these kinds of loans versus FHA loans.
Fannie Mae loans are a good option for individuals who have good credit, a down payment of at least 3 percent (or 20 percent to avoid PMI), and a low debt-to-income ratio.