Chapter 3 Primary and Secondary Markets

Standardized underwriting secondary market agencies

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Standardized underwriting
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Secondary Market Agencies Underwriting guidelines and uniform documents are a quality control system to ensure that loans purchased by secondary market agencies meet or exceed minimum standards. I Inspires investor confidence. I Strongly influences primary market lenders. Standardized underwriting
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Secondary Market Agencies Prime loan Loan made to borrower with A credit rating. Subprime loan Loan made to less creditworthy borrower. GSEs and subprime loans
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Secondary Market Agencies Prime loan Loan made to borrower with A credit rating. Subprime loan Loan made to less creditworthy borrower. At one time, Fannie Mae and Freddie Mac bought only prime loans. Subprime loans didn’t meet their standards. GSEs and subprime loans
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Secondary Market Agencies In 2005 Fannie Mae and Freddie Mac began buying significant numbers of subprime loans. I Primarily A-minus loans : top layer of subprime market. Encouraged to do so by government, to help meet affordable housing goals. GSEs and subprime loans
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Secondary Market Agencies Before current crisis, many industry analysts credited Fannie Mae and Freddie Mac with: dramatically increasing home ownership rates; GSEs and the economic crisis
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Secondary Market Agencies Before current crisis, many industry analysts credited Fannie Mae and Freddie Mac with: dramatically increasing home ownership rates; reducing mortgage interest rates; GSEs and the economic crisis
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Secondary Market Agencies Before current crisis, many industry analysts credited Fannie Mae and Freddie Mac with: dramatically increasing home ownership rates; reducing mortgage interest rates; making underwriting practices sounder and fairer; and GSEs and the economic crisis
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Secondary Market Agencies Before current crisis, many industry analysts credited Fannie Mae and Freddie Mac with: dramatically increasing home ownership rates; reducing mortgage interest rates; making underwriting practices sounder and fairer; and providing mortgage lenders with access to global capital markets. GSEs and the economic crisis
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GSEs and the Economic Crisis Before current crisis, critics argued: claims about how much GSEs benefited public were exaggerated; Criticism before crisis began
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Before current crisis, critics argued: claims about how much GSEs benefited public were exaggerated; GSEs were too large and had too much power over mortgage industry; Criticism before crisis began GSEs and the Economic Crisis
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GSEs and the Economic Crisis Before current crisis, critics argued: claims about how much GSEs benefited public were exaggerated; GSEs were too large and had too much power over mortgage industry; GSEs limited opportunities for other investors and enterprises; and Criticism before crisis began
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GSEs and the Economic Crisis Before current crisis, critics argued: claims about how much GSEs benefited public were exaggerated; GSEs were too large and had too much power over mortgage industry; GSEs limited opportunities for other investors and enterprises; and GSEs weren’t being run well (2004 accounting scandals).
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  • Spring '10
  • N/A
  • Mortgage loan, Subprime mortgage crisis

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