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Unformatted text preview: gh FHLMC initially built up a portfolio of FHA/DVA mortgages, it now deals almost entirely in conventional mortgages, including standard, graduated, adjustable, and other forms. A federally
5-18 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS
mandated ceiling for home loans is adjusted annually in accordance with a price index. Loans within these ceiling limitations are termed “conforming” loans. FHLMC is a major source of multifamily rental project mortgage money. FHLMC packages substantially all of the mortgages it purchases into pools and issues securities (participation certificates, or PCs) against them. FHLMC also has issued certificates which perform more like bonds than “passthroughs” (guaranteed mortgage certificates, or GMCs). FHLMC is the major issuer of conventional mortgage–backed securities. Authorization – The FHLMC may buy and sell conventional, shared equity, FHA, and DVA loans, thereby encouraging the savings and loan associations to make more FHA and DVA loans. Benefits – Encourages growth in the secondary mortgage market by allowing the lenders to sell real estate loans (liquidity) and by providing the investors with these loans without the need for complicated loan origination or service Systems, thereby giving the borrowers greater choice of lenders. For more information on Freddie Mac please visit their web-site at www.freddiemac.com GOVERNMENT BACKED LOANS (FHA, DVA, CAL–VET)
There are two major categories of loans. One is government–backed loans, where Federal and state governments participate directly in residential loan financing, which include the Federal Housing Administration, the U.S. Department of Veterans Affairs, the California Department of Veterans Affairs, and non–government–backed loans, which are a various city–backed subsidized home loan programs. In this section, we discuss what these programs do and some of the advantages and disadvantages of these programs. FEDERAL HOUSING ADMINISTRATION
The Federal Ho...
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- Spring '10