Sentences with phrase «investors if borrowers default»

Fannie Mae and Freddie Mac encourage home ownership by purchasing mortgages on the secondary market, securitizing them, and reselling them to investors with the implicit guarantee that the government will reimburse investors if borrowers default on the mortgages.

Not exact matches

For example, if a borrower defaults on their mortgage, Fannie and Freddie are responsible for the losses on the loans they guarantee to investors, while Ginnie Mae is financially responsible for the bond payments to the holders of Ginnie Mae securities.

Since investors» money and risk of loss is directly tied to an individual borrower, it could present the borrower with an unsafe situation if they were to default on a loan with their identity or personal details known.

Making a so - called «qualified mortgage» (QM), which can't have riskier features like interest - only payments or balloon payments, protects a mortgage lender from liability if it sells the loan to investors and then the borrower defaults.

If lenders sell non-QM loans, and the borrowers default, lenders are less protected from lawsuits and «buybacks,» having to refund the investors» money.

So for the loans which are underwritten to, say FNMA Guidelines, investors know there is a certain underlying credit quality for the MBS that they purchase and even if a borrower defaults on their mortgage, the investor will be fully repaid.

+ read full definition in the property to pay investors back if the borrower defaults and the property needs to be resold.

If a borrower defaults on a mortgage, the investors still get paid by the GSE.

In other words, if a borrower defaults on the mortgage, Fannie or Freddie will pay the investor (the ultimate owner of the mortgage debt) instead of the borrower.

The government's guarantee of the mortgage loans assured investors that if the borrower defaulted, they would be repaid in full.