Some definitions,
words, terms or organizations that you need to know about-
1. GSE- Government Sponsored Enterprise. These
are organizations that may or may not be supported, funded or attached to the federal
government. The two most common include:
·
Freddie
Mac- Federal Home Loan Mortgage Corporation
·
Fannie
Mae- Federal National Mortgage Association
These
organizations invest in MBS (Mortgage Backed Securities) pools. In other words,
they buy or invest in mortgages in groups based on amounts, interest rates, locations
and other criteria.
You may recall
a few years ago when the housing industry was horrible, most of the issues were
directly related to how bad these MBS pools were performing. When these loans defaulted,
the GSEs had no way to pay their investors and were losing money…a lot of
money. So much money that the federal government stepped in to bail them out.
2. Loan Reset- If you were approved for a loan
modification under the Home Affordable Modification (HAMP) program back in 2010
or so, most of those loans provided for an interest rate reset at the end of 5
years.
If
you have one of these loans, look for your loan modification paperwork and look
for language related to loan resets or rate adjustments.
You
could be OK with the adjustment (either up down) assuming that the load mod
did what it was supposed to…get you back on your feet. But if your situation is unchanged or no better that it was 5 years ago, it sounds like the GSE’s want your
mortgage company to reach out to you now and see what they can do to have you
go into default again.
Better
you beat them to it! Call them and find out what is going on with your loon if
it is subject to a loan reset.
3. If your loan is not held by a GSE or other
investor, these rules or guidelines may not apply to you. Let’s say your loan
is with a local bank or a credit union, it is possible that these financial
institutions will not abide by these guidelines since your loan is not held by
Freddie Mac or Fannie Mae.
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