Conforming loans

Conforming loans

Mortgage loans that meet the qualifications of Freddie Mac or Fannie Mae, which are bought from lenders and issued as pass-through securities.

Conforming Loan

A mortgage loan that Freddie Mac and Fannie Mae are allowed to buy. These organizations buy mortgages from the original lenders so as to reduce risk to the lenders and, thereby, maintain a smooth flow of mortgage credit. Conforming loans must meet certain guidelines. Included among these guidelines are requirements, such as a maximum debt-to-income ratio for the property owner, but the most important rule states that neither organization may buy a loan worth more than a certain amount. This amount changes every year according to changes in the median home price. See also: Jumbo loan, Mortgage-backed security.
References in periodicals archive ?
Non-conforming or "jumbo loans" typically have tighter underwriting standards and carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.
8226; 3% Down Conforming Loans - Late last year, Fannie Mae and Freddie Mac announced the availability of 97% loan-to-value conforming mortgages, which were retired several years earlier.
Nonetheless, Passmore, Sherlund, and Burgess (2005) do find that the size of the jumbo-conforming spread moves inversely with jumbo MBS liquidity and with factors affecting MBS demand and supply, consistent with the view that liquidity differences are an important determinant of the spread between jumbo and conforming loans.
Fannie Mac's decision to utilize the temporary increase in conforming loan limits to purchase jumbo-conforming mortgages under the same pricing structure accorded portfolio purchases of regular conforming loans will help home buyers in high-priced markets.
Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac.
Non-conforming or "jumbo loans" typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.
Conventional loans may or may not be conforming loans, therefore.
It's important since conforming loans issued by lenders have lower interest rates, and lower monthly payments, than the kind of loans used to buy properties priced above the limit.
Next the article goes on to explain that 2014 loan limits for conventional loans generally follow those of conforming loans.
October is a critical month pricewise because that is when two major loan underwriters, Fannie Mae and Freddie Mac, decide whether they will raise their limit for conforming loans.
Additionally, PHH Mortgage acquired the servicing of more than 100,000 conforming loans from CUNA Mutual Mortgage Corporation in December 2005.
A recent article from Loan Love helps borrowers to understand some of the more commonly confused loan terms, one of which is high balance conforming loans.