Fannie Mae (FNMA)

[Bruce A Thompson]

It is the same money used over and over

The bank gets the application on you.

The bank gets an approval to close from FNMA whereby they agree to buy the loan from the bank at a 4% yeild.

The bank goes to their depositors accounts, gets $100K and closes your loan for $100K at 5% yield.

The payments generated on the $100K loan @ 5% nets $102,500.00 when those payments are sold to FNMA @ 4%. (it is called current value of future payments or yield spread premium) The bank takes the $102,500.00, pockets $2500 as profit and returns the original $100K to their depositors account paying them six or eight dollars for the use of their $100K for a few days.

They get my application for a loan the next day.

Lather, rinse, repeat.