Home | Real Estate Investment Loan
Year ago in the business of making home loans, mortgage lenders would lend out money and keep the note until all the payments had been made. This could mean that a lender would be waiting around for 15 to 30 years to receive all of their money back. In some rare cases, a mortgage lender would have to wait even longer for their cash to return. If you had a piece of paper sitting under mattress that said someone owed you money, that piece of paper would be of little use to your immediate money needs now wouldn't it? Well this is how the mortgage lenders felt when they held the paper on mortgages they had made. The paper wasn't creating big returns in a short time like they would have wanted so they looked for a better way to create those type of numbers, and do it for as long as they could. The Secondary Market Fluctuating interest rates caused mortgage lenders to take a second look at the mortgage notes they had tucked away in their investment portfolio. They discovered a way to reuse these mortgages in a way that would take full advantage of ever-changing loan interest rates as well as new and higher loan origination fees. A new way of doing things appeared in the latter part of the 1930's. At that time the secondary mortgage market was born. And this secondary loan market provided a relief for the primary mortgage market that would change the whole mortgage industry. Secondary mortgage market players provided an alternative for holding notes in portfolio and offered cash to primary lenders that they could use immediately. Two Maes And A Mac Fannie, Ginnie, and Freddie. Of course we're familiar with these particular monikers but do we now exactly who these folks are? Maybe not who, but the real inquiry may be what they are and what they have done to manifest the American dream of owning real estate. Probably the most recognized nick-names in the mortgage industry, these three are movers and shakers in the secondary mortgage market. Known collectively as members of the same family, these branches on this family tree have developed a reputation for making possible what necessarily wasn't so years ago. Ginnie Mae, Fannie Mae, Freddie Mac make sure that the notes held by primary mortgage lenders are reused and returned to people like us in the form of new mortgages. Secondary mortgage market players don't just do this out of the goodness of their hearts. In return for giving primary mortgage lenders a way to get immediate cash fast, secondary mortgage players receive a discount when they purchase portfolio notes and this allows them to bundle several notes as investments for investors. As a dumb kid who is unafraid to ask to dumb question, you must always consider that it may be best for some to wait and not so much for others.
Article Source: http://www.realestateinvestmentarticles.net
H. Anthony Geddes would like to invite you to learn everything from using a mortgage calculator to learning how to choose a good broker. Also, don't forget to get your free mortgage gift when you visit the site.
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
