Question by DRG: How was Countrywide various from Freddie Mac and Fannie Mae?
In the course of the subprime mortgage crisis, how was Countrywide diverse from Freddie Mac and Fannie Mae? I know Bank of America purchased Countrywide and the government purchased the other two nonetheless all 3 of these corporations gave subprime loans. What did they do that was diverse from each other?
I ask this query simply because when I look up countrywide today, it says it is a insurance company. Does that imply in the previous it was a mortgage broker or an investment bank?
Ranger when you say package loans do you mean really producing them into MBS? or packaging them to give them to an investment back or one thing?
So joeyv did the investment banks give loans to make MBS as nicely or did they just get them from Fannie Mae and Freddie mac? And my second question is that you are saying countrywide did not securitize them, just gave the mortgages to other corporations like Fannie and Freddie to securitize them right? So countrywide did not actually produce them?
Very best answer:
Answer by ranger_co_1_75
Fundamentally they have been performing the exact same thing.
Fannie Mae (Federal National Mortgage Association) and Freddie Mac ( Federal Home Loan Mortgage Corporation) initially had been the only ones who had been permitted to “package loans” and sell them. Chartered and backed by the Federal Government, Fanni Mae and Freddie Mac differed only in the type of loans they packaged and sold in the secondary mortgage industry..
Then came the Bush era of Bank DeRegulation and any individual who could lie and falsify documents was permitted to problem loans and package them into bundles to sell to investors. That included Countrywide.
The distinction was Countrywide was a purely private enterprise and supposedly not backed by the Federal Government. That is why Bank of America, a private corporation, absorbed Countrywide, and FHFA, a government agency, absorbed Fannie Mae and Freddie Mac.
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