If there was ever a “canary in the coal mine” moment for the next housing crisis, it’s that mortgage and insurance giant Fannie Mae maintains a secret mortgage blacklist.
The Wall Street Journal broke the news on March 17 that Fannie Mae keeps a blacklist that includes condo associations it believes have too little property insurance or need to make critical building repairs. According to the Journal, it’s a list that every major lender pays attention to.
In other words, if you’re buying a condo in a building on that list, you’re likely not going to get a loan. However, the insurance “canary” isn’t just about condo buildings.
If you think homeowners insurance has already skyrocketed — and it has — hold on because you’re likely about to get screwed even more. First, some background:
The power of Fannie Mae, Freddie Mac, and Ginnie Mae
These three agencies insure against losses on about 90% of all residential mortgage loans. These loans end up as mortgage-backed securities (MBS), which amount to more than $9 trillion.
The liquidity of the MBS market is the main reason getting a home mortgage in the U.S. is relatively easy. Without agencies like Fannie Mae, our housing market would be a fraction of what it is today. When borrowers make the monthly payment on their loans — usually to a loan servicer — the monthly payment goes through the agencies and makes its way to the MBS market.
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https://www.racket.news/p/there-are-signs-of-a-category-5-housing