Are you a first-time homebuyer trying to figure out what all these acronyms mean? Well you’re in luck! Here are some definitions and functions of different agencies and what they might be able to do for you!
FHFA: Federal Housing Finance Agency
The Federal Housing Finance Agency, or FHFA, is an agency who oversees our country’s secondary mortgage markets such as: Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Under the Housing and Economic Recovery Act of 2008, the FHFA’s mission is to provide effective supervision over these secondary mortgage markets to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market.
FHA: Federal Housing Administration
The FHA, Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. The Federal Housing Administration is currently the largest insurer of mortgages in the world, insuring over 34 million properties. The FHA allows lenders to take on clients who have lower credit scores, lower down payments, etc. They insure lenders against loss in the event that borrowers default on their loans.
HUD: Housing and Urban Development
HUD, also known as Housing and Urban Development, is a U.S. government agency created to support community development and increase home ownership. In order to achieve this, HUD has been improving affordable home-ownership opportunities, increasing safe and affordable rental options, reducing chronic homelessness, fighting housing discrimination by ensuring equal opportunity in both the rental and purchase markets, and supporting vulnerable populations.
Fannie Mae is a government sponsored enterprise that is run by Congress to keep money flowing to mortgage lenders to help strengthen the U.S. housing and mortgage markets. Fannie Maeis designed to support affordable home-ownership as well as HUD. Fannie Mae stands behind mortgage lenders, local and national banks, credit unions and other financial institutions in all 50 states to securitize or buy the mortgage loans they originate, enabling them to replenish their funds so they can lend to other homeowners, but they do not offer home loans.
Freddie Mac was created by Congress and is regulated by the FHFA, to keep money flowing to mortgage lenders to support home-ownership and rental housing. Much like Fannie Mae, their mission is to provide liquidity, stability and affordability to the U.S. housing market. Freddie Mac does not actually offer home loans but they make sure that financial institutions have mortgage money to lend, they make it easier for consumers to afford a decent house or apartment and they help stabilize residential mortgage markets in times of financial crisis.
Federal Home Loan Bank:
The Federal Home Loan Banks are a government sponsored group of cooperatives that lending institutions use to finance housing and economic development in local communities. About 80 percent of U.S. lending institutions relies on the Home Loan Banks for low-cost funds. Because the Home Loan Banks are cooperatives, their low costs are passed on to American financial institutions for home mortgage loans, small businesses, rural, agricultural, and economic development lending. Home Loan Banks finance businesses of all sizes and represent the largest collective source of home mortgage and community credit in the U.S.
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