| The Federal Housing Administration is just one part of | | | | also charged with maintaining certain standards to |
| the government created system to keep the | | | | prevent the insurance from becoming a taxpayer |
| mortgage market and help homebuyers become | | | | burden. |
| homeowners. Although none make loans directly to | | | | Fannie Mae |
| consumers, each has a very important role to play and | | | | Fannie Mae is acronym for the Federal National |
| none could continue to operate without the other. | | | | Mortgage Association. It is a shareholder-owned |
| The Federal Housing Administration | | | | company with a federal charter and a public mission to |
| More commonly known as the FHA, the Federal | | | | buy mortgages on the secondary market, which |
| Housing Administration is a part of the Department of | | | | allows lenders to continue issuing new mortgages. It is |
| Housing and Urban Development. The FHA’s role is | | | | solely funded by private investor funds, and receives |
| to stabilize the housing market by helping first time | | | | no federal funds, although it is subject to limited federal |
| buyers become owners and current owners refinance | | | | oversight by HUD and the Office of Federal Housing |
| difficult mortgages. It also offers loans to Native | | | | Enterprise Oversight (OFHEO). |
| Americans buying homes on reservations and buyers | | | | Fannie Mae is also restricted in the value of the loans it |
| rehabilitating distressed homes. | | | | can acquire from lenders. The conforming loan limit is |
| The FHA sets requirements for the loans it insures, | | | | determined each year by the OFHEO. The limits are |
| and also approves and monitors lenders who issue | | | | similar to FHA loan limits. Although most loans are for |
| FHA-insured loans to buyers. The FHA insures those | | | | single-family homes, it can also buy loans issued to |
| loans by collecting mortgage insurance premiums, and | | | | developers of multi-family rental housing, especially |
| paying claims to lenders if the loans go into default. | | | | affordable housing. |
| Because it is a part of the federal government, the | | | | Once it purchases the loans, Fannie Mae packages |
| FHA is able to insure loans issued to less-qualified | | | | them into mortgage-backed securities, which it then |
| buyers than conventional lenders could. This enables | | | | sells. |
| more people to move into the market. However, it is | | | | |