On February 23rd, 2012, Bank of America (BOA) reported that it would be putting an end to selling new mortgages to Fannie Mae, drawing attention to a struggle between the two real estate giants. The struggle has to do with billions of dollars in losses as a result of the bursting of the housing market bubble.
This latest action by BOA is a significant escalation in a legal conflict relating to the number of defaulted mortgages BOA will need to repurchase from Fannie due to the original loans not adhering to correct underwriting standards.
Fannie Mae takes home loans from various banks and packages them into securities which are in turn sold to investors, or alternatively held on their own balance sheet. Currently, around 40% of all the mortgages in America are secured by Fannie Mae, a huge proportion, any way you slice it.
In 2011, BOA was the 3rd largest provider of mortgages to Fannie, based on research done by Inside Mortgage Finance. BOA generated over $156 billion in mortgages in 2011, with a total of $37.7 billion sold to Fannie. BOA has been quick to clarify that this action will not be detrimental to its customers, claiming that it can recoup the loss of Fannie as a securer by instead striking a partnership with Freddie Mac or Ginnie Mae, other large federally-sponsored real estate buyers. It also has the options of turning to the private sector or activating its massive balance sheet.
Despite the fact that customers are not expected to experience any impact related to this decision, BOA has stated the the lack of Fannie as a backer may result in its home loan terms and rates losing their competitiveness in the future. A BOA spokesperson has said that the bank remains committed to assisting struggling homeowners via the federal HAMP program.
That is however a statement that many BOA customers attempting to obtain a loan modification approval will take with quite a pinch of salt. The process of applying for a HAMP modification via BOA remains inefficient, and Mycaal.com customers continue to share about their frustrations experienced when dealing with the bank, even when adhering to the HAMP loan modification guidelines. In the meantime, the fate of Fannie and Freddie hangs in the balance as the federal government revisits its role in the country’s real estate market moving forward. Policy makers in the nation’s capital are preparing to redefine the government’s association with the United States housing market.
As these various power-plays take place between the biggest housing market actors in the country, and volatile housing market conditions persist, it remains clear that the average homeowner in the Unites States is best off taking their financial destinies into their own hands. It is important to be proactive about taking steps that can improve your financial situation, and one way of doing this is by pursuing a loan modification with expert loan modification help. An accurately prepared loan modification application made possible by innovative loan modification software injects realistic hope into your personal finances.
About Carla Ghosn
|CEO and Founder of MyCaal.com, earnestly helping American homeowners save their home. If you need loan modification help, visit www.mycaal.com to access loan modification software that helps you get pre-qualified and prepares your loan modification package online.|