major sources of mortgage financing.
(1)Primary Mortgage Markets- where mortgage loans are
originated. It is made up of
(A) Institutional lender- which are Insurance companies,
Savings and Loans (Savings bank) and Commercial Banks. They
receive most of their deposits from =ECHousehold Savings=EE
(Savings of individual depositors)
(i) Insurance Companies=F3They prefer long terms loans on
existing commercial property such as shopping center loans.
Mortgage bankers (Loan Correcpondents) usallu negotiate and
service their loans.
(ii) Savings and Loan Association(Savings Banks)– Savings and
Loanhave the greatest percentage of their asset in real estate
loans. This is main source of 1-4 family unit home loans.
(iii) Commercial Bank=F3Commercial banks prefer short term loans
and they are the primary source of construction financing.
(B) Non-Institutional lenders.=F3Which basically represents
Private lender and Mortgage Companies such as Mortgage Bankers
and Mortgage Loan correspondents.
(i) Private Lenders=F3This is major source of Junior loans.
Junior loans are second, third and fourth loans.
(ii) Mortgage Companies such as Mortgage Bankers and Mortgage
Loan correspondents=F3They are licensed by Department of Real
Estate or by Departmentr of Corporations as Residential
Mortgage lenders or California Finance Lenders. They originate
conventional loans.
(2)Secondary Mortgage Market- This is resale market place for
loans, where existing loans are bought and sold. The
participant in the secondary mortgage market have increased the
amount of housing credit available to the economy. The major
participants in the secondary mortgage market are
(A)Federal National Mortgage Association ( Fannie Mae) -
Originally a government agency, it is now a corporation with
shares traded on New York Stock Exchange. It was created for
the purpose of increasing the amount of housing credit
available to the economy. It is concerned primarily with the
development of the secondary mortgage market for conventional ,
FHA, and VA loans originated in the primary mortgage market.
(B)Government National Mortgage Association (Ginnie Mae)=F3A
federal agency within the Deparment of Housing and Urban
Development (HUD)
(C)Federal Home Loan Mortgage Corporation ( Freddie Mac) -
Works with Fannie Mae and Ginnie Mae to Increase the
availability of mortgage money and maintain the secondary
market for residential mortgages.
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