Non Conforming Loans

Mortgage loans can normally be categorized according to three categories, depending on how they are handled by the lender after closing:

  • Portfolio
  • Conforming
  • Non-conforming

A portfolio loan is kept by the lender in its "portfolio" rather than sold to the secondary mortgage market.

Conforming loans, which normally have the best rates and terms are sold to the secondary mortgage market through agencies such as Fannie Mae (FNMA), Freddie Mac (FHLMC) or Ginnie Mae (GNMA); they are called conforming because for a loan to be sold to these agencies, they must satisfy or "conform" to the more stringent guidelines established by these government-chartered agencies. For more details, see the "Conforming Loan Programs" article.

A non-conforming loan is also sold to the secondary mortgage market; however, it is sold through private conduits because such loans do not conform to Fannie Mae, Freddie Mac or Ginnie Mae guidelines. This article provides an overview of the non-conforming industry and a review of the different types of non-conforming programs.

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