Maria Ny asked:




A silent second mortgage is typically a second mortgage offered at preferential (subsidized) terms to those who qualify. These are generally offered by the state through one of three federally authorized programs, the Mortgage Revenue Bond (MRB) program. These programs typically entail a 97% FHA loan and a 3% silent second mortgage that is offered at below-market rates or forgiven entirely after a certain period of time.

Counties and municipalities also offer Mortgage Assistance Programs (MAP) to first-time home buyers that buy in their communities which assist in providing down payment to complete the purchase of the home. These generally come in the form of a silent second mortgage placed on the property at the time of closing that is forgiven after a certain period of time as long as the owner doesn’t sell nor do a cash-out mortgage refinance. Counties and municipalities also offer silent seconds for home improvements and renovations. Check with your local redevelopment agency for more information.

A silent second mortgage for investment properties is different than it is for residential properties. It generally entails second or junior mortgage loan on the property that does not require a scheduled payment until the rental income levels have reached a pre-determined point.

Silent second mortgages are even sometimes used as a workaround for when home owners are behind on their mortgages. Rather than foreclose, the lender might modify the loan by reducing the rate, or offer a “silent second,” in which payments on the past-due amount are deferred until the house is sold.

The riskiest form of a silent second mortgage is an unrecorded private money loan from the seller to the buyer during a purchase transaction. An example of this is an 80/10/10 plan where the borrower puts down 10%, the seller lends the borrower 10%, and the first mortgage is 80%. However, Robert Bruss, author of the nationally syndicated “Real Estate Mailbag”, states that an unrecorded silent second mortgage can be dangerous for the seller because if the buyer doesn’t make the payments to the seller, the seller can’t foreclose to get the property back.

Ana

Mary Ny asked:




Fannie Mae was chartered in 1938, as the Federal National Mortgage Association (FNMA), with the responsibility of creating a secondary market for home mortgages. It operated under direct federal control. In 1968, the Federal National Mortgage Association was partitioned into two separate entities- one wholly owned by the government and known as the Government National Mortgage Association (Ginnie Mae), and the other to retain the Federal National Mortgage Association (Fannie Mae) name. It was privatized by legislation enacted in 1968 and became fully private in 1970.

Fannie Mae (along with Freddie Mac) sets the limit each year on the size of a conforming loan based on the October to October changes in mean home price. Mortgages above this limit are considered jumbo and super jumbo loans because Fannie Mae and Freddie Mac only buy conforming loans to repackage into the secondary market, making the demand for non-conforming loans much less. Thus, interest rates for jumbo and super jumbo loans are higher than for conforming loans.

According to the Office of Management and Budget (OMB), borrowers see mortgage rates 25-50 basis points lower because of what Fannie Mae and Freddie Mac do. This is reflected in lowered interest rates of up to a half percentage on each individual homebuyer’s mortgage, which translates to lower payments and increased consumer cash flow for other purposes. Fannie Mae and Freddie Mac also were the agencies that recommended that FICO scores be used in mortgage lending. Now, FICO scores are the mortgage industry standard for originating conventional loans, adjustable rate mortgages (ARMs) based on various prime rate indices, jumbo loans and 2nd home purchases as well as the popular cash out mortgage refinance loans.

Today, Fair Isaac estimates that more than 75% of all mortgage originations in the U.S. involve the FICO credit score. FICO scores are being used in almost every sector of the nation’s economy, and largely determine whether or not you will be approved for credit (including mortgage loans), what interest rates you will pay and what loan terms are available to you. This is why it is important to maintain a high FICO. But, if you’re a homeowner who’s had credit issues in the past, a timely mortgage refinance or home equity loan (second mortgage) for debt consolidation can help raise your score substantially and save you a lot of money.

Pauline