Mortgage Verification Form Fannie Mae: Fill & Download for Free

Watch your Money!From what I am reading about the Dodd-Frank Act, the answer is YES in the United States. Everyone remembers the financial crisis of 2008, where banks made foolish investments in extremely overpriced housing markets. People were allowed to go into debt without proper verification of employment or salary, moving into houses they could not afford. These mortgages were bundled together, misrepresented, and sold in giant blocks as investment-grade when they were closer to junk bonds. When the housing bubble burst, investment banks started to fail. The taxpayer was left to bail out the big banks and insurance companies that backed the mortgages.As a result, Congress passed Dodd-Frank, which was supposed to be a Wall Street reform and consumer protection act. But here’s some of the fine print. When the next major banking crisis occurs—and I believe it will—there will be no bailout.Instead, there will be a (BAIL-IN) which uses the current depositors’ money, which the bank holds, to bail out the bank. It allows the banks to seize the depositors' money and in turn, give them stock in their failing bank. There is no due process; it’s the law.Today two-thirds of U.S. mortgages are insured by either Fannie Mae or Freddie Mac. Both crashed in 2008. Fannie Mae and Freddie Mac stock prices dropped from about $60 per share to less than $1 in 2008. In my opinion, they have not recovered. Today both stocks trade for around $3 per share.I also don’t believe you can entirely rely on FDIC insurance of $250,000 per account. In a significant banking crisis, that money will disappear as quickly as mortgage insurance vanished in 2008. In the next financial crisis, you may see your deposits seized and swapped for worthless stock in your failing bank. Dodd-Frank protects Wall Street and screws the small investor.

Digital mortgages are the same as traditional mortgages, just done on the internet! In the past few years, many of the banks have worked to digitize their mortgage origination systems, removing time and effort from the mortgage process. Generally, most banks focus their digital mortgage application process on the more standardized “conforming” mortgages — meaning mortgages that conform to the GSE (Fannie Mae and Freddie Mac) guidelines and are generally <$450k.Of course, I should note that Plaid has done a lot of work with mortgage lenders to streamline the asset verification process. More to be announced on this soon!

Fannie Mae and Freddie Mac, collectively referred to as GSEs, for Government Sponsored Enterprises, were swept up in the mortgage crisis of 2008. They posted significant losses that caused them to be placed into government conservatorship, supervised by the Federal Housing Finance Agency (FHFA). Since that time, both GSEs have returned to profitability and have repaid all the bailout funds, plus $115 billion in net dividends to the Treasury. Nearly all the GSEs’ profits have been sent to Treasury since 2013 under a policy called “net worth sweep.”In other words, Fannie and Freddie have been significant cash cows for the U.S. Treasury for more than six years.The GSEs have increased their loan limits nearly every year in response to increasing home prices. A notable exception is the decade from 2006 to 2016. For much of this period, prices were declining or increasing at a far slower rate:Conforming loans—those eligible for sale to Fannie Mae and Freddie Mac—continue to be the first choice for most home buyers. The rates and terms are better than most other loans, and they have performed well for the investors in the pre- and post-crisis years.If the GSEs did not raise their limits, they would lose market share to what are called “non-conforming” or “jumbo” loans. These loans, for greater loan amounts than those purchased by Fannie and Freddie, are generally more difficult for borrowers to qualify for, with lower debt to income ratios and requirements for substantial cash reserves after closing. Narrowing the eligibility window by not keeping pace with increasing values would prevent many from becoming homeowners.There are many who believe to this day that the mortgage crisis was the fault of government housing policy, or of loans with smaller down payments. Neither is true. The crisis was triggered by numerous exotic mortgage programs promoted by investment banks such as Lehman Bros., Goldman Sachs and UBS. They would purchase loans from lenders where borrowers could simply “state” their income knowing there would be no verification, where there was no down payment at all, and for borrowers with very low credit scores. This was the “perfect storm” that resulted in the crisis and ensuing Great Recession.Fannie and Freddie’s loan limits had nothing to do with it.