Refinance & American Home Ownership

Howard Cincotta writes:

Subprime mortgages are high-rate loans for borrowers who cannot qualify for lower-interest conventional loans.

During the housing boom of recent years, mortgages were sold as securities. Dreams and Homes

Homeownership soared after World War II as a result of favorable mortgage rates, a rising economy and a housing industry that grew swiftly to meet the new demand for suburban housing. Housing and Taxes

The role of the housing sector in the overall economy is huge. The average American has enjoyed homeownership for another reason: homeowners can deduct from taxes the interest paid on a mortgage loan.

Fannie and Freddie

Housing experts cite the overall availability of mortgage funds, or liquidity, as a significant factor in the relatively high rate of homeownership. The institutions chiefly responsible for maintaining mortgage liquidity are two oddly named companies, Fannie Mae and Freddie Mac.

The Federal National Mortgage Association, or Fannie Mae, was established in 1938 to ensure a consistent supply of mortgage funds at reasonable rates for communities and home buyers. The Federal Home Loan Mortgage Corporation, or Freddie Mac, was created in 1970 to stabilize and expand the mortgage market as well – in effect, competing with Fannie Mae.

Now, the lending institution can replace its capital investment by selling the mortgage to Fannie Mae or Freddie Mac – and use the money to issue a new mortgage.

Both companies have undertaken steps to increase mortgage funding during the current crisis.

The primary mission of another HUD agency, the Federal Housing Administration (FHA), is to provide mortgage insurance for loans made by FHA-approved lenders. "We’re the largest issuer of mortgage insurance in the country," said Brian Montgomery, FHA commissioner and assistant HUD secretary for housing. "Our programs are critical to helping Americans keep their homes."

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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