Non-conventional mortgage loans are basically government loans: VA (Veterans Administration), FHA (Federal Housing Administration) and FmHA (Farm Housing Agency)—now RHS Rural Housing Service—loans.
This article will discuss two specific non-conventional programs in more detail below:
Ginnie Mae, the Government National Mortgage Association, is the agency responsible for securitizing much these non-conventional, government loans. All other types of primary mortgage loans provided by private lenders and not guaranteed by the government are considered conventional loans.
Contrary to what many people may believe, the VA and FHA normally do not fund loans.
These two governmental agencies only guarantee certain portions of a mortgage loan. But these are powerful and effective guarantees. These guarantees are reassuring to lenders in that they lower the lender's overall risk exposure.
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