Mortgage News- Fannie and Freddie
It is always interesting to watch what happens each day in Mortgage News around the Country. You will find those articles which are somewhat positive and then those that are very bleak. To our satisfaction; the interests are still low and seemingly will stay that way with rate ranging anywhere from 4.40 to 4.50 for a 30 year fixed rate mortgage. Not that bad and in fact really great. It is just too bad that the people who are losing their homes were not able to have the advantages of getting these fixed rates before they lost their homes.
Some struggling homeowner have been given the Home Affordable Modification with a final modification in tact with a low rate of interest, true; but not enough. Not only has it not been enough, but this has not taken care of the declining property values and those who cannot refinance or obtain the modification. The Home Affordable Modification has been declined to, too many people who were actually trying to pay their payments and begging for help; even up until the trial period and then after the trial period; they were declined. So in many ways this endeavor has done nothing but profess to help millions of Americans while millions more have lost their homes.
This is not the negative side; this is the true side. I try to keep up with what is going on with the people who are struggling to live, as well as stay in their home and I have read so many complaints about Bank of America, Litton Loan Servicing and others telling the homeowners one thing and doing another. It is evident that these so called miracles; have not worked for near enough people.
Let's give Freddie Mac a boost here and put him first....I think he deserves it.
The latest news is coming in that Freddie Mac is suspending evictions for homeowners who are about to have to move out of their home. They have announced that these homeowner can stay in their home during the holidays. This suspension will be from December 20, 2010 - January 03, 2011.
You got that right; they can spend one last holiday at home.... for whatever that is worth and I am sure it is worth a lot to a family with children or anyone for that matter.
Nothing has been said about Fannie following suit.
Fannie Mae - Source of Funds and Loan to Values
Fannie Mae is changing some programs and loan to value basics and down payment source of funds strategy. This is good news especially for first time homebuyers. Fannie Mae has decided to kill the Flex 97 mortgage product. Back in September I wrote an articles about the Flex 97; letting people know that Fannie had a product similar to FHA that went up to 97% without, of course the Upfront MIP that FHA has.
The Flex 97 product is being retired by Fannie. Remember Fannie makes the rules that the lenders abide by to sell their loans to them, so this is very important.This will not kill the deal though, for those who do not have a lot of money saved to buy their home.
Fannie will allow loan to value ratios up to 97% on most product to include:
- one-unit properties
- principal residences
- purchase and limited cash-out refinances, and
- fully amortized fixed-rate and all standard ARM products
What will not be allowed:
- high-balance mortgage
- interest-only loans
- manufactured homes
- construction loans, and properties
Flexible Source of funds per the following:
- with loan that have a 80% loan to value or less: no minimum amount required to be from the borrower own saved funds. This will be for 1-4 units principal residences. The funds may be as follows:
They will also allow the flexible source of funds for the 3% down payment, closing cost, and prepaid items from gifts, grant from entity, employers assistance and community seconds.
*Second homes do not allow for this option they are limited to 90% LTV and no contributions of funds.
- with loan to values greater than 80%: no minimum amount of funds from the borrower's own funds is required. This will be limited to 1- unit principal residence. (not high-balance mortgage).
What this means is that the loan amount will be limited to the 417K, maximum Fannie Mae loan limits for 1 unit properties.
What this seems to be mimicking is FHA guidelines a bit, from where this previous underwriter, loan office and operations person sits....not all bad and in fact, really good. This will eliminate a borrower who can qualify for a conventional loan for everything except the funds to close; from having to obtain a FHA loan and have to have the upfront MIP added and financed in the loan.
** Sources: FNMA: As always, certain restrictions may apply, to include but not limited to; the loan being run in Fannie Mae's DU (automated underwriting system). These guidelines may depend upon certain other criteria that is not mentioned here. It will be based upon credit, income, employment and normal approval standards just like any other loan. **please check with your lender for other qualification standards
This is a short summary of what is coming down by December 13, 2010.