Ferrari-Lund Real Estate South
Ferrari-Lund Real Estate South
Sheri Barnes, Ferrari-Lund Real Estate SouthPhone: (775) 745-6425
Email: [email protected]

Coming to Friendly Terms in Real Estate

by Sheri Barnes 05/01/2019

Ginnie, Freddie, and Fannie are friends of the real estate mortgage and housing industry. You hear about them whenever you read very deeply about how mortgages work. But who are they? And what do they have to do with you?

What’s in a name?

These three entities are nicknames for mortgage agencies established by the United States Government. Freddie and Fannie are siblings, while Ginnie is more of a cousin.

- Fannie Mae is the nickname for FNMA-the Federal National Mortgage Association.

- Freddie Mac is the nickname for FHLMC-the Federal Home Loan Mortgage Corporation.

- Ginnie Mae is the nickname for GNMA-the Government National Mortgage Association.

A little family historyBoth Fannie and Freddie are what is commonly known as a GSE, or government-sponsored entity. That means that while federal law established Fannie in 1938 to provide home loans backed by the US government, it later sold Fannie in 1968 to investors, making it privately owned. Freddie, established in 1970, formed to create competition for Fannie in the mortgage market. Fannie and Freddie don't lend money. Instead, they undergird the home loan market by purchasing loans made by banks. They repackage the loans into securities to sell to investors. They make various guarantees to investors in the event that homeowners default on their mortgages. This market is called the secondary mortgage market, while primary means the loans to homeowners directly. 

Both Freddie and Fannie trade in the public market with investors owning shares of each of the mortgages rather than shares of the company. In the market, this is called mortgage-backed securities (bonds). If a homeowner defaults on their mortgage, it affects the value of those securities.

Cousin Ginnie, formed in 1968, is a government agency, but performs similar functions to the siblings, except only with government-insured mortgages, like FHA and VA loans—those backed by the Federal Housing Administration. While she does not supply initial funding, she does insure the loans. So, if a borrower with an FHA loan defaults, both the Federal Housing Agency and Ginnie Mae continue to pay out monies due to the investors that bought Ginnie Mae-backed securities.

During the subprime lending crisis in 2008, both Freddie and Fannie lost tremendous value. People that invested in Freddie or Fannie bonds lost tons of money. At that time, in an effort to stabilize the housing industry, the federal government took over as conservator of both Freddie and Fannie, providing money to bail out much of the debt and pay investors. Conservancy means that the government controls the operations of both entities, although it does not own them.

Why does it matter?

Mostly, what happened to Freddie, Fannie and Ginnie matters more to investors than to borrowers. But the healthier Freddie and Fannie are, the greater the variety of loan types available to borrowers. The less Ginnie has to pay out to cover defaulted mortgages, the more money available to loan to first-time borrowers. 

If you’re wondering which loan-type is best for you, contact a qualified mortgage broker to discuss your options.

About the Author

Author
Sheri Barnes

Buyer & Seller Agent

PERSONAL

Born and raised in the Sacramento area (Fair Oaks), real estate has always been "in my blood" perhaps, due in part to growing up in a builder family. I graduated from Bella Vista High School, attended California Lutheran College, later graduated from CSUS (Sacramento) with a degree in Communications and a minor in Business Administration. In 1993, I moved to Reno to work for a Fortune 500 company and obtained formal sales training. I've always been involved with some sort of extra-curricular activities including sports, music, dance and theatre. My current hobbies include spending time with my family, gardening, an occasional game of golf and volunteering with various youth programs and organizations. I'm Past Chairman of the Board of Trustees of Mountain View Montessori School. 

PROFESSIONAL

Real Estate is my business, my only business. I have been a full service realtor with over 24 years of experience. My focus is helping my client achieve their real estate goals, whether they are first-time homebuyers, Seniors, buyers/sellers, investors, short sales or relocation. I specialize in new construction communities and residential resale in Washoe County.

I truly love this area and take great pride to know much more, than that which is expected. Every transaction is unique and can often require a creative solution to get results. I'm a customer driven Realtor dedicated to achieving results and providing exceptional service. I feel that this is the reason I receive an abundance of referrals from past clients.

As a buyer’s agent, I listen to my client’s goals so I can find the perfect home and NEGOTIATE the best price and terms that fits their needs. As a seller agent, I know that pricing, location and condition are key factors in selling homes for the highest price possible. With this in mind, I create a customized marketing plan specifically for your home.

Please feel free to call, text, or email me with any questions, anytime.  

CERTIFICATIONS AND RECOGNITIONS

REALTOR® Certification

CDPE Certified Distressed Property Expert

SFR Short Sale And Foreclosure Resource Certification

GreenRE Certified

Member National Association of Realtors

Member Northern Nevada Regional MLS

Consistently in the Top 10% of Producing Realtors in Northern Nevada