Conforming loans follow underwriting guidelines of which two entities?

Conforming loans follow underwriting guidelines of which two entities?

• A. Fannie Mae and Freddie Mac
• B. FHA and VA
• C. Freddie Mac and Ginnie Mae
• D. Ginnie Mae and HUD

Answer: (A)

Conforming loans follow underwriting guidelines published by Fannie Mae and Freddie Mac. These two government-sponsored enterprises buy loans that meet their specific standards, so lenders structure and evaluate loans to fit those criteria in order to sell them in the secondary market. The guidelines cover key factors like credit scores, debt-to-income ratios, loan-to-value limits, property type, and required documentation, ensuring consistency and liquidity for lenders. The other options involve programs with different oversight. FHA and VA are government-backed programs with their own insured or guaranteed loan guidelines, not the conventional conforming standards. Freddie Mac and Ginnie Mae operate in the secondary market differently: Freddie Mac is one of the primary conforming-loan purchasers, while Ginnie Mae guarantees securities backed by government loans but does not set the underwriting criteria for the loans themselves. HUD is the federal department that administers housing programs (including FHA), but it does not establish the conforming-loan underwriting standards used for conventional loans.

Conforming loans follow underwriting guidelines published by Fannie Mae and Freddie Mac. These two government-sponsored enterprises buy loans that meet their specific standards, so lenders structure and evaluate loans to fit those criteria in order to sell them in the secondary market. The guidelines cover key factors like credit scores, debt-to-income ratios, loan-to-value limits, property type, and required documentation, ensuring consistency and liquidity for lenders.

The other options involve programs with different oversight. FHA and VA are government-backed programs with their own insured or guaranteed loan guidelines, not the conventional conforming standards. Freddie Mac and Ginnie Mae operate in the secondary market differently: Freddie Mac is one of the primary conforming-loan purchasers, while Ginnie Mae guarantees securities backed by government loans but does not set the underwriting criteria for the loans themselves. HUD is the federal department that administers housing programs (including FHA), but it does not establish the conforming-loan underwriting standards used for conventional loans.