Tag Archives: fannie mae

Real Estate

Fannie Mae Changes Borrowers Requirements for Home Mortgage Loans

Fannie Mae today announced it is updating several policies impacting the future eligibility of borrowers to obtain a new mortgage loan after experiencing a preforeclosure event, including a preforeclosure sale, short sale, or deed-in-lieu of foreclosure.

Among the changes is the amount of time that must elapse after the preforeclosure event before a borrower is eligible to obtain a new mortgage loan owned or guaranteed by Fannie Mae. This waiting period may be dependent on the loan-to-value ratio of the transaction and whether extenuating circumstances, such as loss of employment, contributed to the borrower’s financial hardship. Additionally, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a significant derogatory credit event.

These changes apply only to loans owned or guaranteed by Fannie Mae and do not impact those owned or guaranteed by Freddie Mac or the Federal Housing Administration (FHA).

For more information about the changes, including the new waiting period requirements, please visit Fannie Mae Selling Guide

John J. O’Dell
Real Estate Broker
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Real Estate

Home Affordable Refinance Program Extended Another Year

According to a news release, the government is giving homeowners another year to refinance  their loans under a little-used program designed to help borrowers whose homes have plummeted in value.  My experience with clients who have tried to refinance their homes have had a total horrible experience with their mortgage holders.

The Obama administration effort, known as Home Affordable Refinance Program, had been scheduled to end on June 10 but will now run out on June 30, 2011, the Federal Housing Finance Agency said Monday.

The program allows borrowers who owe up to 25 percent more than their homes are worth to refinance to lower interest rates.

It was originally projected to help 4 million to 5 million homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac. So far, it has helped around 220,000, according to the Treasury Department. Yes, and you can blame the banks 100 percent. They would rather foreclose then refinance.

John J. O’Dell
Real Estate Broker

Real Estate

Fannie Mae Announces 3.5 Percent Seller Assistance on HomePath® Properties

Incentive Part of Ongoing Effort to Stabilize Neighborhoods

Fannie Mae (FNM/NYSE) announced that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.

“Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help,” said Terry Edwards, Executive Vice President of Credit Portfolio Management. “Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home.”

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3 percent down.

Source: Fannie Mae

Real Estate

Banks Paying For Their Bad Loans

Countrywide ad before they had to be taken over by Bank of America
Countrywide ad before they had to be taken over by Bank of America

Banks are reaping what they sowed.  As you know, during the housing boom, all the banks wanted were more and more mortgage loans. They loosen the rules that  so low that credit scores did not seem to matter, as long as you were breathing and had a pen to sign mortgage documents. So now they have to buy back their bad loans!

According to the Wall Street Journal:

“The accountants at Fannie Mae and Freddie Mac are  auditing mortgage files to uncover loans with improper documentation about a borrower’s income, and then forcing banks and savings and loans to buy the loans back.

Freddie required lenders to buy back $2.7 billion of loans in the first nine months of 2009. Fannie Mae won’t disclose its figures, but the mortgage trade publication Inside Mortgage Finance said Fannie made $4.3 billion in loan-repurchase requests in the first nine months of 2009.”

Of course now, the banks are tightening up their underwriting for mortgage loans more carefully than they were just a year ago.  This results in a further slowing down of the lending process. Which is good and bad of course. But I think in the long run it will be better for all of us. What do you think?

Written by John J. O’Dell
Real Estate Broker
With a background in Civil Engineering
and General Contracting

Real Estate

A Large Down Payment On Your Home Might Give You a Higher Interest Rate on Your Mortgage

sold-sign-held-in-arms

You would think that putting more money down when buying a home would entitle you to a lower interest rate. Not so according to an article in the New York Times.

Take, for instance, borrowers who want to buy a $400,000 home, and who have a credit score of 720, which is considered very good.
In late August, such borrowers who had $80,000 saved for a 20 percent down payment would have qualified for a 4.875 percent rate on a 30-year fixed-rate loan, according to Regina Mincey-Garlin, an owner of RCG Mortgage in Montclair, N.J.

But that was also the rate offered to borrowers putting down only 5 percent, and therefore required to have private mortgage insurance.
Oddly, those who put down 25 percent, or $100,000, were saddled with a higher interest rate, 5.375 percent, Ms. Mincey-Garlin said.
The underwriting rules from Fannie Mae and Freddie Mac consider borrowers in the 20 to 25 percent down payment category to be the riskiest, in part because they are not required to carry private mortgage insurance. At higher down payments, however, rates begin to fall.

Amy Bonitatibus, a spokeswoman for Fannie Mae, said that the policy wasn’t meant to encourage lower down payments, which some have seen as the main culprit in the home foreclosure crisis.     ad-2-short-sale

“It’s just a less risky loan from our point of view,” Ms. Bonitatibus said, because the lender’s exposure to foreclosure losses is largely eliminated by mortgage insurance.

While borrowers who take out mortgage insurance can indeed enjoy lower interest rates, their monthly payments will be larger than those who made the larger down payments, because the loan itself is bigger
.
A borrower who put down 25 percent for a $400,000 home would make a monthly mortgage payment of $1,680, while the borrower who put 15 percent down would pay $1,906 — or $1,799 in principal and interest, plus another $107 monthly in mortgage insurance. (The mortgage insurance is tax deductible, however, so depending on a borrower’s financial circumstances, the net mortgage liability would probably be less.)

Ms. Mincey-Garlin of RCG Mortgage says she still advises borrowers to make a down payment as large as they can, because the increased equity will help them in the long term.

Read the entire article in the New York Times
This article was posted for educational purposes.

Real Estate

Fannie Mae New Loan-to-Value Ceiling for Home Affordable Refinance Program

fannie-mae-building
Fannie Mae (FNM/NYSE) announced today that the company is providing information to servicers regarding changes to the Home Affordable Refinance Program (HARP) that permits refinancing of existing Fannie Mae loans with loan-to-value (LTV) ratios up to 125 percent. The loans will be eligible for delivery on or after September 1, 2009.

“This step aims to reach even more borrowers who would benefit from a lower payment,” said Michael J. Williams, President and Chief Executive Officer. “Many borrowers in good standing have been shut out from the benefits of refinancing due to significant declines in property values across the country. By broadening the scope of the initiative, more borrowers will experience savings on their monthly mortgage payments and have a better chance of sustaining homeownership over the long term.”

Previously, HARP allowed for refinancing of Fannie Mae loans with LTVs up to 105 percent. With the expansion, loans with LTVs above 105 percent and up to 125 percent will be eligible for refinancing through the company’s Refi Plus™ manual underwriting option. For loans with LTVs above 105 percent, borrowers must refinance through their existing servicer and the new loans must be fully amortizing fixed-rate mortgages with terms greater than 15 years up to 30 years.

In conjunction with the LTV eligibility expansion, Fannie Mae will offer a special .50 percent reduction in the loan-level price adjustment charged for loans with LTVs above 105 percent and loan terms of 20 and 25 years. The reduction is intended to incent borrowers to select shorter terms and build positive equity in their homes sooner than with a typical 30-year mortgage.

HARP is part of the Administration’s Making Home Affordable plan aimed at stabilizing the housing market, helping Americans reduce their mortgage payments to more affordable levels, and preventing avoidable foreclosures. For more information, visit Making Home Affordable.gov

Nevada County Home & Land Statistics, Nevada County Information, Real Estate

Nevada County Residential & Land Sales, April 2009

"Alternative Housing" Location, Oregon
"Alternative Housing" Location, Oregon

 

What the figures show for April of this year is that residential sales are about the same number as it was for April of last year.  However, we’ve had a further decline in medium residential home prices of minus 23 percent. Here are the stats for sales in Nevada County.

There were 67 residential properties sold in April 2009 compared to 62 residential sales in April 2008.  Total residential sales from January to the end of April 2009 were 191 sales compared to the same period last year of 203 sales.

The medium price for April 2009 was $299,000 compared to April 2008 of $387,500 a decline in market price of 23 percent.  There were 1,165 residential properties listed for sale at the end of April, which based on the number of sales from January to April 2009 equals about 1.6 years supply of residential property for sale, assuming sales continue at the same rate.

There were 20 land sales from January to April in 2009 with a 45 month supply of land at the end of April. Last year there were 45 land sales with a 49 month supply of land.

I’ve noticed a pickup in pending sales, which I post on this website daily for those that are interested, and it seems that the pending sales are up. They have been hovering in the 200 pending sales starting within the last month. However, this is for all sales, not just residential sales.

Where are we with future sales? It’s anyone’s guess, Fannie Mae and Freddie Mac asked lenders to forestall any more foreclosures until March 6, 2009.  What they are doing now that the agreement date has expired? Some circles say we are in for a tsunami of foreclosures. The following banks had agreed to the government’s request and their expiration dates of the agreement. 

JP Morgan Chase – New Owner-Occupied residential loans that are owned and serviced by JPMorgan Chase.  As with Fannie Mae, the moratorium of foreclosures end date, March 6th.

Citigroup – All Citi-owned first mortgage loans that are principal residence and on loans for which understandings with investors have been reached.  Moratorium end date – March 12th.

Bank of America (also Countrywide now renamed Bank of America Home Loans) – Delay foreclosures sales on owner occupied properties whose mortgage loans are owned and serviced by B of A or Countrywide  – Through March 6th.

Wells Fargo (also Wachovia) – For Loans it holds.  The moratorium is expected to remain in place until the government’s foreclosure prevention plan is announced.  The majority of Wells Fargo’s mortgage loans are serviced by it and owned by other investors. 

 

Real Estate

Jumbo Loan Limits Raised by Fannie Mae and Freddie Mac

mansion-picture

Fannie Mae and Freddie Mac will once more begin buying “super-conforming” mortgage loans of up to $729,750, which will bring rates down for borrowers with good credit seeking loans previously classified as jumbo.
Currently, loans greater than the $417,000 conforming limit in “normal” housing markets — or the super-conforming limit of up to $625,500 in high-cost markets — are considered jumbo loans.

Jumbo loans carry higher rates than conforming loans because they aren’t eligible for purchase or guarantee by Fannie Mae and Freddie Mac. Rates on jumbo loans are running at least 1 percent to 1.5 percent higher than conforming loans of less than $417,000.

In between conforming and jumbo loans are so-called super-conforming loans that exceed the $417,000 conforming loan limit, but are still eligible for purchase or guarantee by Fannie and Freddie.

Super-conforming loans carry slightly higher interest rates than conforming loans — about 25 to 30 basis points — but are less costly than jumbo loans that Fannie and Freddie can’t buy or guarantee. A basis point is one hundredth of a percent.

On Jan. 1, the upper limit for super-conforming loans was rolled back from $729,750 to $625,500. But the economic stimulus bill signed into law Feb. 17 restored the higher limit for single-family homes in high-cost markets that was in place for much of 2008.

The following week, the Federal Housing Finance Agency published lookup tables for the new Fannie and Freddie limits in high-cost markets — 250 counties nationwide.

But Fannie Mae did not issue its eligibility requirements for the new limits until March 30. Freddie Mac published its guidelines on April 16. Both companies will begin buying super conforming loans of up to $729,750 from lenders on May 4.

Wells Fargo will begin making super-conforming loans of up to $729,750 in high-cost markets on Monday, and Bank of America will start in mid-May, the San Francisco Chronicle reported.

Real Estate

Fannie Mae Eases Credit To Aid Mortgage Lending

foreclosuresign
Fannie Mae announced that in order to help ownership rates among minorities and low-income consumers, they are going to ease the credit requirements on loans it purchases from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Quoting the New York Times:

“In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.

”Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ”Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

OH, BY THE WAY, THE DATE OF THIS PUBLICATION WAS SEPTEMBER 30, 1999 
Read the article at New York Times