\n\t\t\t\t
Since the conforming loans set the standards for the mortgage market, once the loan is non-conforming, lenders can cherry-pick what they want to see in a borrower.\u00a0<\/p>
They do adopt some of the standards as the conforming loans, however, a non-conforming loan is going to more strict guidelines.\u00a0<\/p>
The reason for this is that the investor has to hold on to this debt and cannot sell it in the secondary market as it is not backed by Fannie Mae or Freddie Mac.\u00a0<\/p>
The investors can still sell your mortgage but it would be more like a private transaction.<\/p>
This higher risk creates a more conservative and opinion based underwriting process on what they want to lend you.\u00a0<\/p>
About 67 to 70 % of the mortgages are underwritten to Fannie and Freddie rules each year.\u00a0<\/p>
This allows the loans to be sold to them and Fannie Mae and Freddie Mac will package those loans and sell them as mortgage-backed securities which are very similar to bonds.\u00a0<\/p>
However, Fannie and Freddie will only purchase those loans if they are within the conforming limits.\u00a0<\/p>
If the loan limit exceeds the conforming limits it is no longer backed by Fannie and Freddie making the investor hold this mortgage debt as they cannot be sold to Fannie and Freddie.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t