Question

Distinguish between conforming and nonconforming residential mortgage loans and explain the importance of the difference.

Answer 1

The main difference between confirming and non confirming loan is that confirming loans are approved by FHFA ( Federal Housing financing Agency) and meet the underlying requirement by Fannie mae and Freddie Mac whereas the non confirming loans are not.

This is the major difference.

Both Fannie Mae and Freddie Mac but the loans from lender and repackage them into more securities for more lending under the fundamentals of securitization for more lending.

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