A lender that makes a loan either keeps the loan in
its portfolio or sells the loan in the secondary mortgage market.
Loans that the lender keeps, does not sell, are called Portfolio
Loans. Loans that the lender sells are called nonportfolio
loans.
Conforming Loans are conventional loans that meet the
underwriting standards for purchase by Fannie Mae or Freddie Mac.
Those loans are written for 15 year or 30 year terms and are not
assumable. They have strict guidelines regarding down payments and
maximum amounts. Because of their strict underwriting requirements,
the interest rates for conforming loans are generally less than
rates charged for nonconforming loans.
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