100%(1)1 out of 1 people found this document helpful
This preview shows page 1 - 3 out of 3 pages.
Surname 1Student's nameInstructor's nameCourseDateFannie MaeBeing founded in 1938, Fannie Mae is a government sponsored entity that provides instant access to funds on favorable terms to local banks, loans and mortgage firms that in return lends money to finance home ownership thereby serves a public mission. The company’s corporate governance is made up of 9 members of which, 3 are appointed by the USA president (Ventolo & Martha, 14). With this, the board oversees corporate performance as well as the implementation of market, operational and credit risk whilst packing mortgages into a mortgage backed security and assuring the timely resettlement of principal as well as interests on the underlying mortgages. This attracts the secondary mortgage investors in the market whom might have not invested in mortgages, hence increasing the money available for housing because secondary mortgage market has more liquidity and low interest rates (Ventolo & Martha, 13).Moreover, with consistent changes in economic conditions, Fannie Mae has tightened its underwriting standards in an effort that ensures lending and borrowing is carried out honestly and fairly. Above all, it’s underwriting standards for example, the lend ought to get a complete and signed report that precisely depicts the condition, market value, and marketability of the real property that the borrower is looking to purchase sets the benchmarks in verifying the responsibilities of the lender and the borrower’s eligibility. This protects the company from unnecessary risks that may lead to massive losses (Ventolo & Martha, 16).Lastly, in determining
Surname 2if the borrower’s loan application is within the acceptable risk, Fannie Mae uses desktop, collateral and servicing management default underwriter tools to access and mitigate losses all through the loan lifecycle (Ventolo & Martha, 17).
Surname 3Work citedSirota, David, and Doris Barrell.Essentials of real estate finance. Dearborn Real Estate, 2013: 12-17.