Fri, 13 Sep 2013, 8:04am PDT
Shouldn't impact anyone. Non-conforming loans are already the same rate or sometimes even cheaper than conforming loans.
It might have a small effect on qualification standards however I'm betting banks will simply copy what Freddie and Fannie already have on the books.
Fri, 13 Sep 2013, 8:41am PDT
right so what is the purpose?
The purpose used to be to expand the amount of money available for lending. Freddie and Fannie would sell bonds and those bonds would be used to purchase or guarantee private mortgages.
The world is much different now.
1. Private mortgage bonds are now a liquid market separate from Freddie and Fannie.
2. There's an ocean of cash just begging for returns at ridiculously low rates.
3. The federal reserve is donating money to mortgage bonds.
As a result what used to be a private money premium has now shrunk to zero.