Careers in Mortgages

In the last century, home mortgages were the basis of commercial banks. However, after the Depression, the government has formed the Federal Housing Administration, which proposed insured home loans. In 1938, Fannie Mae was formed to assist in offering reasonably priced homeownership. It is transformed into share holder financed company in 1968 however its mission remains one and the same that is providing affordable home. Also, on the same line Freddie Mac was established in 1970 is assisting Americans finance homes and help in financing rental housing.

Along with this, there are many mortgage providers in the U.S. including Regions, SunTrust and Capital Home Loans. There is also Internet or online companies like Lending Tree which connect prospective homeowners with hundreds of lenders.

In 2007, the mortgage crisis hit the U.S. It not only affects the lending industry but also many other industries felt aftershocks. According to expert, it might lead U.S. into recession. The crisis happened when a number sub prime borrowers or consumers with low credit ratings were paying interest rates above the key rate and started to default on their home loans.

With these lenders failed to pay in record numbers, sub prime lenders were thrown out of business. The aftershock of this crisis has been felt all over the place, from domestic as well as international stock markets to government organizations.

In 2008, shares of Freddie Mac and Fannie Mae's drops significantly almost half to their value. This event hit the financial market severely. Following the stock event, the U.S. Treasury persuades some favors from Congress on behalf of the agencies including temporary increase in a credit line for Fannie and Freddie, right to buy equity in one or both of the mortgage companies. U.S. Treasury Secretary Henry Paulson was firm that any action to save the agencies should not advantage their shareholders.

But Paulson prepared plan to save Freddie Mac and Fannie Mae almost two weeks before their financial dilemma came to picture. In an effort to help restrain the penalty of the housing disaster, Paulson assured the Fed as well as the Federal Reserve Bank of New York that loans to Fannie or Freddie would be provided as a temporary step not a lasting solution.

In August 2008, as stocks of Fannie Mae are down by almost 90 percent, some management transformation takes place. Chief financial officer, chief business officer and chief risk officer of firm resigned. On September 7, 2008, the U.S. government decided to grab control of Fannie Mae and Freddie Mac in order to prevent their continuing losses.