Thursday, September 10, 2009

the mortgage Guarantee Insurance Corporation (MGIC)

Fannie Mae is the world‘s largest mortgage bank and, until recently, had a virtual monopoly in secondary market trading activities. Early in the 1970s, however, the mortgage Guarantee Insurance Corporation (MGIC) was organized by a private group in Milwaukee, Wisconsin. Known as "Maggie-Mae," this corporation insures conventional home mortgage loans carrying down payments as low as 5 percent. In contrast, Fannie Mae is permitted to acquire conventional mortgage loans with down payments only as low as 10m percent. Of course, Fannie Mae has a significant advantage over Maggie Mae because it operates as a federally sponsored agency with a privileged borrowing status and normally can raise funds at lower cost.

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