Conforming/Non-conforming Loans

Question 1

What are conventional Mortgages?

Answer 1

They are mortgages NOT insured or guaranteed by the FHA, VA or USDA.

Question 2

What are the two types of conventional mortgages and describe them.

Answer 2

1. Conforming Loans- mortgages that meet loan limits and other standards that loans must meet to be purchased by Fannie Mae and Freddie Mac.
2. Non-conforming loans- mortgages that do not meet loan limits and standards. Usually have higher interest rates. An example would be a Jumbo Loan.

Question 3

What agency created in 2008 oversees Fannie Mae and Freddie Mac?

Answer 3

Federal Housing Finance Agency which was created under HERA. (Housing Economic and Recovery Act)

Question 4

List all examples of NON-conforming Loans:

Answer 4

1. Jumbo Loans
2. Alt-A Loans
3. Subprime loans
4. Non-traditional mortgages
5. Niche loans
6. Super-conforming loans
7. Option ARM’s and Nontraditional ARM’s