We Are Already On Tuesday, 10/14/25
Rani Tamari – #EntrepreneurOfTheWeek – Tuesday, Post 3
Hi friends,
This is Rani Tamari, and it’s already Tuesday, 14/10/25.
As I promised on Sunday, today’s topic is:
The Wonderful American Mortgage!
A Few Concepts
When I talk about the American mortgage, I mean a 30-year fixed-rate mortgage, with principal not tied to inflation, and you can repay early without prepayment penalties.
History – The 1930s
Before the establishment of Fannie Mae in 1938, over 55% of Americans rented their homes.
Most loans for homeowners were 5-year balloon loans, and almost everyone refinanced at the end of the term.
This worked relatively well until the 1929 crisis, when banks could no longer lend.
Within two years, there were massive foreclosures across the U.S.
FDR and HOLC:
In 1933, FDR established the Home Owners’ Loan Corporation (HOLC) to help citizens refinance mortgages.
HOLC offered longer-term mortgages, not balloon loans.
In 1938, the government established Fannie Mae, which started insuring mortgages.
Mortgage-Backed Securities (MBS) were invented.
1940s–1950s
1948: The U.S. Congress authorized FHA to give 30-year fixed-rate mortgages for new homes.
1954: This authorization expanded to include existing homes.
1960s
1963: LBJ became president after Kennedy’s assassination.
April 1968: Just before Martin Luther King’s assassination, the Civil Rights Act was signed.
Part of the act included Fair Housing (FHA)—ending racial discrimination in mortgage lending.
August 1968: HUD Act signed, aiming to build and rehabilitate 26 million housing units, 6 million for low-income families.
1968: Along with GNMA, companies began insuring mortgages and eventually trading mortgage insurance.
Ginnie Mae provided mortgage guarantees for the first time, creating Mortgage-Backed Securities (MBS).
1970s
1970: The federal government authorized Fannie Mae to buy conventional loans (QM loans, not insured by FHA, VA, or FmHA).
Freddie Mac was created to compete with Fannie Mae, strengthening the secondary mortgage market.
Fannie Mae went public.
Important Note: At its peak, Fannie Mae was valued at $95 billion, with over $4 trillion in assets.
2008 Mortgage Crisis
The 2008 crisis wasn’t a real estate crisis or a stock market crisis—it was a mortgage market crisis.
The U.S. mortgage market collapsed, dragging down the housing market and most of the global economy.
The truth was revealed: there is no true capitalist mortgage market.
For me, it was beneficial. I had:
Credit score 800
High tech salary
I got amazing mortgages (<5%), including investor loans (for Israelis).
2019: Non-QM Foreign National Mortgages
Due to restrictive regulations starting a decade earlier, banks struggling to expand in the QM world began offering loans to foreign investors:
Non-QM
Foreign National DSCR Mortgage
Based on rental income covering the mortgage
This is exactly the mortgage I specialize in.
I got one after leaving tech, without a salary slip:
Loan: $152,000 (~500,000 NIS)
Rate: 7%
Monthly payment: $1,012 (principal + interest)
No bank account needed, no credit required
The Wonder of the American Mortgage
Put 30% down, the bank provides the rest.
Principal loses value with inflation, while rent rises with inflation.
Interest fixed for 30 years.
If rates fall, refinance at better terms.
If rates rise, the bank loses, we gain.
It’s truly miraculous.
Even today, I have a mortgage with Bank Leumi.
I always pay on time, but my debt in shekels rises—sad but logical.
The bank protects itself; I don’t.
American leverage + U.S. government backing—that’s the gold I have.
What do you think about the American mortgage?
Wonderful or not?
Want to learn about its history?
Resources:
Short 2025 video: https://www.youtube.com/watch?v=DizP5aEuQKw
2010 article: NBC News
Books on Amazon:
Guaranteed to Fail: Fannie Mae, Freddie Mac, and the Debacle of Mortgage Finance
The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall
Blogs:
Responses