#Fannie mae foreclosures dyer in mac

It is here, at the secondary marketвЂ™s intersection of home mortgages and downstream investor interests, that fracking and the shale oil/gas boom become a substantial threat to the entire system as itвЂ™s currently built.

#Fannie mae foreclosures dyer in mac

Because of their fiduciary role in secondary mortgage market investing, it is in the interest of Fannie Mae and Freddie Mac to establish certain guidelines for home mortgages that decrease the risk for future lost value and/or default, and they have done so.

Which means that these entities hold more than $6.7 trillion dollars worth of home loans that they have packaged and pushed to mostly institutional investors such as pension funds or investment banks and their clients. According to attorney Elisabeth Radow, writing for the New York Bar Association Journal, Fannie Mae and Freddie Mac have purchased or guaranteed more than 65 percent of all new home mortgages in this country. The primary purpose of the FHFA is to provide oversight to Fannie Mae, Freddie Mac and the Federal Home Loan Banks. In 2008, thanks to the mortgage crisis and the increasing insolvency of certain financial institutions, the Federal Housing Finance Agency (FHFA) was formed. The purpose of government-sponsored institutions Fannie Mae and Freddie Mac is to purchase the home mortgages issued by banks and other lending institutions and then package those home loans into mortgaged-backed financial instruments that can then be sold to investors.Д«uying mortgages from the banks that originated them ensures that those banks have a constantly renewing source of money to loan the next round of homebuyers. That being the case, the federal government sponsors the secondary mortgage market to provide ongoing liquidity to the housing market. If this were the only mortgage market, then qualifying for a home loan would be quite difficult for most Americans because it wouldnвЂ™t take long for most lending institutions to loan out all their available funds. This part of the mortgage transaction is a function of the primary mortgage market. To secure a mortgage using the property as collateral, an appraisal of the property must be done and the buyer must be able to secure adequate homeowners and title insurance. are made using money loaned to the buyer by a bank, credit union or government entity in the form of a mortgage against the property being purchased. Approximately 90 percent of all home purchases in the U.S. When a homeowner attempts to sell, chances are, whomever is going to buy your house will need a mortgage to do so. These losses in real estate value are also being exacerbated by the impact that fracking and oil and gas shale development is having on the primary and secondary mortgage markets. Researchers also claim that home values in places like Boulder County, where environmental awareness is particularly high, could drop by 20 percent or, in worst-case scenarios, be rendered nearly worthless because no one will buy them due to their proximity to oil and gas activity. This is particularly startling when you consider that in the year 2000, there were less than 20 wells in the entire county.ДЄlso as reported last week in BW, research into the impact of oil and gas extraction on real estate values has found that homes near wells or even as far away as 2.48 miles from production activity can lose between 4 percent and 15 percent of their market value. For example, a recent examination by The Wall Street Journal found that in Johnson County, Texas - an area sitting atop the Barnett Shale on the southern edge of Fort Worth with a population of 150,000 - 99.5 percent of county residents live within a mile of one or more of the 3,900 wells that now blanket the county.

When a shale play and a population center collide, the results are staggering. And it is predicted that we are only in the beginning stages of the current drilling boom, which will eventually extend into 34 of the lower 48 states. More than 15 million people now live within one mile of an oil and gas well that has been drilled and fracked just since the year 2000. Last week, in part one of this series, we examined how fracking and oil and gas shale development is likely driving down home values for the millions of Americans living near wells, production platforms, pipelines and other industrial paraphernalia belonging to the oil and gas industry as a result of its current drilling boom.ДЄs we noted, the problem is a large one.