|
|
|
Monday Morning Mortgages>
Monday Morning Mortgages
November 30, 2009
Fannie Mae 8.0 Limiting Guidelines Dec 12
Beginning Dec 12, 2009, Fannie Mae is updating their software approval program. Any loans submitted Dec 12 or later, must be run through the new 8.0 program or have a previous approval status from the previous DU version 7.1. Changes are notable and will affect your buyers who are reaching for higher DTIs (debt-to-income ratios). The purpose of the change is to “help Fannie Mae and its customers better manage default risk in this market…”
• Total expense ratios now limited to 45% DTI, possibly up to 50% with compensating factors. With DU 7.1 I had been able to get approvals and loans for up to 65% DTI. So this is a real tightening of credit conditions.
• Minimum credit score 620. So any buyer with a FICO score lower than that should be in credit counseling (I offer this service without fee), not home shopping.
• Foreclose history requirements: 5 years since completion date, and then only with 10% minimum downpayment and a minimum FICO of 680, no investment property or second homes, no cash out refinances. After 7 years, borrower’s can use standard guidelines.
• Deed-n-Lieu will require 4 years aging, and have some restrictions on lending until the deed-in-lieu ages 7 years.
• Chapter 13 bankruptcies will require 2 years from discharge date and Chapter 7 bankruptcies will require 4 years.
If your buyer doesn’t fall into these guidelines, there is a good chance that FHA will still be a good fit, so make sure your buyers gets qualified with all mortgage options available.
First Time Home Buyer Tax Credit for Non-Occupant Co-borrowers
If a home is purchased with a non-occupant co-borrower (usually a relative helping the buyer to qualify for the loan), the occupying buyer is eligible for the whole tax credit provided they meet the other tax credit requirements. They should submit the final HUD-1 to their tax preparer, be able to show that the occupant is indeed paying the mortgage (bank statements), and make sure they are listed first on the loan application to insure that the mortgage interest 1099 will be issued in their name to their address.
Former Clients in Distress?
Where do you send a former client when they call you and tell you they may lose their home? Attached is a brochure from HUD with the steps and resources on who to call and what to do. The bare bones response should be “1) Call your lender, 2) get a HUD-approved counselor, and 3) do not pay fees for assistance to get you out of the situation.”
US Treasury 101
The Federal Open Market Committee is responsible for open financial market operations between banks and the government. It has the ability to influence “the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.”
What do they see in their current crystal ball? The FOMC sees growth strengthening in the next two years, although commercial real estate has a lot of potential for risk. They still see bank credit as “tight”, not much capital spending, and don’t seem overly concerned by the orderly decline of the dollar but do see the potential for inflation.
Rates
Rob Chrisman asks, “So if rates are so great, why are applications dropping and agents continuing to work twice as hard for half as much business?” and I’m sure, as realtors, you ask yourselves the same question. “If this is such a buyers’ market and prices are down, why do I work twice as hard for half the commissions?” I would answer “distressed properties” for this one.
In mid-November, the Mortgage Bankers Association of America weekly application index dropped 4.5% with applications to buy a home up 9.6% and refi’s down 9.5%. This data supports what many in the business already are feeling: That most people who can refinance already have, that the economy would have to go further into the tank for mortgage rates to drop much more, and lenders better get used to a purchase market in the coming months and next year.
|
|
