Ask the mortgage professional the right questions

In Mudd’s case, people want to know about the housing market. Often they ask him if it’s a good time to refinance their mortgage loan. Mudd may be the go-to guy at parties because he heads the Federal National Mortgage Association, or Fannie Mae. Fannie Mae and the Federal Home Loan Mortgage Corp. (Freddie Mac) purchase mortgages from lenders. This in turn allows the lending institutions to provide more home loans.

Naturally people think Mudd, who runs the larger government-sponsored enterprise, would know about the best time to get a mortgage since Fannie Mae is crucial to the mortgage industry. But as Mudd points out, he’s operating in the back end of the mortgage process after the loans have been originated. “I’m not retail,” he tells people.

Frequently, mortgage rates are the topic at parties — and just about anywhere else — because many homeowners are desperate to know the opportune time to get out of the loans that they won’t be able to afford once their teaser rates expire. Of late, Mudd is fielding questions about a new law that has the potential to lower interest rates for jumbo mortgage loans. He certainly was pressed about it during a lunch meeting recently at The Washington Post. First, some background.

A jumbo loan is a mortgage that exceeds $417,000, which is the purchase limit for both Fannie Mae and Freddie Mac. Loans of $417,000 and below are considered conforming because financial institutions can easily sell them to Fannie or Freddie. Jumbo loans are needed for areas where home prices exceed that $417,000 limit, such as high-priced housing markets on the West and East coasts. Because jumbo loans are not purchased by Fannie or Freddie, they typically carry higher interest rates. As of Feb.