Where Does the Money Come From for Mortgage Loans?
In the “olden” days, when someone wanted a home loan they walked downtown to the neighborhood bank or savings & loan. If the bank had extra funds laying around and considered you a good credit risk, they would lend you the money from their own funds. It doesn’t generally work like that anymore. Most of the money for home loans comes from three major institutions: • Fannie Mae (FNMA – Federal National Mortgage Association) • Freddie Mac (FHLMC Federal Home Loan Mortgage Corporation) • Ginnie Mae (GNMA Government National Mortgage Association). This is how it works now You talk to practically any lender and apply for a loan. They do all the processing and verifications and finally, you own the house and now you have a home loan and you make mortgage payments. You might be making payments to the company who originated your loan, or your loan might have been transferred to another institution. The institution where you mail your payments is called the “servicer,” but most likely they do no
