Real Estate In The USA
Real Estate The majority of the mortgages are granted by two companies operating nationwide:
- Fannie Mae: Federal National Mortgage Association; Privatized in 1968
- Freddie Mac: Federal Home Mortgage Corporation; Founded in 1970
As Government Sponsored Enterprises, both have the task of financing America’s middle class in low-interest mortgages when buying a house. To do this, they purchase loans from savings banks and banks. As a credit intermediary, they refinance themselves by securitizing the mortgages they have acquired and selling the pooled loans as “mortgage-backed securities” (MBS) to professional investors such as pension funds and insurance companies. The MBS market is now larger than that for US government bonds.
Basically, the risks of the two financiers from the core business are manageable: they almost only bear the credit default risk. Nevertheless, risks are increasingly seen in the financial market. Both companies have a relatively low equity base and are particularly vulnerable to sudden fluctuations in interest rates. If one of the companies were to pay higher interest rates on its liabilities, rising mortgage rates would result in obvious consequences for the US real estate market.
Also the real estate market
Also for Equifax: The more loans are applied for, the more inquiries end up in Atlanta – and information from Equifax is chargeable.
Only US consumers have allowed themselves too much of a good thing: they have accumulated $ 915 billion in credit card debt, $ 1.5 trillion in auto and other consumer loans, and $ 10 trillion in private mortgages.
An uninhibited culture of indebtedness has spread, a credit culture that is now culminating in the real estate crisis.
Such frenzy of consumption and credit is encountered by Germans. Heidi Hein experiences this almost every day. The German banker, who has lived in the USA for 30 years, heads the European department of the United Commercial Bank in Atlanta. She also looks after many overseas customers. “Germans hate debt,” says Hein. Having debts – apart from the mortgage for the home – is considered “almost anti-social” for most of her German customers, says the woman with her dashing blond hair.
Consumer credit is becoming more and more fashionable in Germany as well, but “acceptance is not nearly as high as in the USA,” says banker Hein.
America’s credit culture not only allows debt; she even commands it. Because if you don’t have a “credit biography”, you are almost incapable of doing business in America.
Or is it, Mr. Dodge? “Theoretically yes. Practical: Rather not, ”admits the man from Equifax. Isn’t it absurd to go into debt to be creditworthy? Dodge shrugs: “That’s how the system works.”
And his company lives on it, as do its competitors Experian and Transunion. “We facilitate and support the trade,” says Dodge. “We provide the lender with the information that will help them make a decision. And thus ensure that a business comes about. ”The majority of the data that Equifax collects concerns private consumers.