THE Blog

MAYBE SOME GOOD NEWS FOR A CHANGE?

"The Housing Crisis is Over?"

An interesting article from the Wall Street Journal!

The Wall Street Journal

On May 16th, Fannie Mae announced that there is a policy change effective June 1, 2008. It is in regards to the down payment requirements for conventional, conforming mortgages that the company will purchase or guarantee. The new policy will accept up to 97 % LTV across the board to qualified borrowers for all owner occupied single family primary residence purchases across all geographic locations in the U.S. This announcement coincides with a new automated underwriting system that is able to limit risk layering and assess each loan more precisely. In other words, a borrower who qualified under the old credit risk model, may or may not be qualified using the new credit risk model. And viceversa. This new model will take into consideration the credit history of the borrower and their ability to repay. So, those marginal buyers who were close to qualifying in the past, but declined, may under the new guidelines now qualify to purchase a home. Time to get out your prospect lists and them get re qualified with me!

These changes supersede the current policies that required higher down payments in markets where home prices are declining.  Now all areas will be treated equal. 

Even with the changes mentioned, the Mortgage Insurance companies may follow suit, but right now, still have a weak stomach for risk. Even though Fannie is loosening up a bit, doesn't mean the MI Companies will insure it. And yes, multi unit properties will still be difficult to finance. But this is certainly a step in the right direction. Guidelines for investment loan purchases are also changing, but the specific changes have not yet been announced.

Freddie Mac is also coming out with new lending guidelines in the near future. I will also post these changes and any additional Fannie Mae updates here on THE Blog when they become available.

If you're interested reading in the whole Fannie Mae announcement, or discussing any creative alternatives to financing your investment purchases, feel free to email or call me.