Effective June 1, 2010 Fannie Mae is mandating a number of additional qualifications for each mortgage application. These additional mandates are intended to ensure that the information collected from buyers when they apply for a mortgage are the same as when they go to close. Fannie Mae is requiring lenders to re-verify a number of pieces of buyer data including their credit scores, employment, and making sure the borrowers are not on the ‘un-approved’ list maintained by the General Services Administration.
As a Cincinnati real estate agent I have a responsibility to guide buyers through the application process, ensuring that they provide accurate information on all of the documents. Because the lenders are re-checking the information if any of it changes it could cause the loan to go through another round of underwriting. To protect my buyers I am advising them to work very closely with their lenders to keep their information current.
Price Sells Real Estate! If you price your property appropriately for the current market conditions your real estate will sell. NPR ran an article a few days ago that really highlights this point. last year the Miami, FL condo market was nearly dead. To many built and proposed condos, to few buyers, and prices that reflected the 2007 levels of nearly $400 sqf.
Move forward to today, Fall 2009, and condo buildings are selling out in 6-8 weeks … at $200 sqf. Peter Zalewski, a real estate broker who runs the Condo Vultures, explains that the Miami Condo market’s price reset has sparked interest in Latin American and South American investors. They seem to be cash buyers and feel that the current prices are a relative bargain.
The challenge that is preventing more buyers form purchasing is that financing is very hard to obtain in these new construction condo buildings. Fannie Mae and Freddie Mac are denying loan applications to well qualified purchasers simply because there is such an over-suply of units that reselling a unit could prove a dauting challenge.
The lesson we all need to learn here is that to sell real estate ANYWHERE you need to price it correctly for today’s market. If you are interested in a condo, or a home in the Cincinnati area contact me today!
Cincinnati homeowners and homeowners around the U.S. need to be aware of the following information if they are looking to refinance and are having difficulty getting approved. There are options for refinance and loan modifications mandated by the federal government.
The Making Home Affordable Program was created to assist homeowners whose home values have declined to the point where they may no longer have equity in their homes. So the homeowners have not be able to refinance their homes and take advantage of lower interest rates. In addition, many of these homeowners are also locked in to 3,5 or 7 year adjustable mortgage rates which will soon reset at higher rates. To try to assist these homeowners the federal government started the Making Home Affordable Program. The purpose of the program is to stop the cycle of foreclosures and short sales and to provide homeowners who are in this position to have options to save their home and financial stability. This program has eligibility requirements that must be met. For more information please visit the Making Home Affordable Website. This site helps borrowers learn basic facts about mortgages, homeownership, and resources available, with more than 17.7 million page views in less than two months.
Fourteen servicers, including the five largest, have now signed contracts and begun modifications under MHA. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75 percent of all loans in the country are now covered by the program. The 14 participating servicers have extended offers on over 55,000 trial modifications and mailed out over 300,000 letters with information about trial modifications to borrowers.
Today I went to Comey & Shepherd‘s quarterly meeting and learned a significant amount about how to assist delinquent homeowners who are behind on their mortgage payments. Since this is such a confusing topic I hope this clarifies the information for you.
There are four options for homeowners who are in this position:
1) Loan Modification- If the homeowner wants to try to keep their home, they can negotiate with the bank to try to come to agreeable terms. This is something that the homeowner can do themselves although there are professionals who will charge you a $1000 to assist with the process.
2) Short Sale- If you have 1 or 2 liens on the property this option can be available to you if your bank is willing to participate. If you have more than 2 liens it can be more difficult or not an option at all. Even if your property sells all deficiencies aren’t always forgiven so be sure to consult a realtor who specializes in short sales, a real estate attorney, and an accountant prior to making the decision to sell your property in a short sale.
3) Deed in Lieu of- Can only be used if there is 1 lien on the property. A hardship must exist, and the homeowner must provide a letter explaining the circumstances of the conditions of the hardship for bank review. Usually this option is exercised once a short sale has failed to unload the property. Essentially what happens is the homeowner signs the deed back to the bank, gives back the keys, and moves out of the property. Federal law does not allow the banks to come after the homeowner for deficiencies.
4) Sheriff’s sale- This is a last resort. Allowing your property to be foreclosed and be auctioned off on the courthouse steps can severely damage your credit and ability to obtain a Fannie or Freddie backed loan for a minimum of 7 years.
For more information on this topic please email me or call me and I can refer you to my colleagues who specialize in this area of Cincinnati real estate.
The Cincinnati Enquirer ran an article today on the rising number of short sales occurring in the current real estate market. Short sales are transactions that occur when a bank or lender agrees to accept less than what’s owed on a home loan to avoid foreclosure.
Why would a seller consider a short sale in lieu of a foreclosure? Although it is still damaging to a seller’s credit and can drop their credit score by as much as 300 points, it can be preferable to try to settle with the lender without incurring the substantial carrying costs and legal fees for the lien holders and property owner while properties move through the foreclosure process which can take multiple months. Fannie Mae recently adjusted their guidelines to dictate only a two year waiting period for a short sale seller to buy another primary residence, while they extended the waiting period for foreclosures to five years.
For buyers short sales can be a good opportunity to purchase a home for below market prices. These homes are less likely than foreclosures to be distressed because the homeowners is still occupying the property. Buyers beware that while there are great deals to be had, the short sale process can be long and frustrating. Some properties can take several months to close due to the number of parties involved.
If you are experiencing financial hardship and are considering a short sale or foreclosure of your home, please discuss your options with your accountant or attorney prior to making the decision to short sell or foreclose. If you need recommendations of professionals in the Cincinnati area, please contact me.
Fannie Mae and Freddie Mac are toughening their credit score and down-payment rules for as of April 1st, 2009. Lenders are already taking these fee increases into account, passing the cost on to the borrower, and those buyers looking to purchase a condominium will be impacted most significantly.
The LA Times explains that a buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO will get dinged with a quarter-point add-on. Applicants buying a condominium that cannot come up with a 25% down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score, simply because they are not buying a traditional detached, stand-alone home. Buyers of duplexes, in which one unit is owner-occupied and the other is rented, will be charged a flat 1% add-on from Fannie, even if they’ve got FICO scores above 800 and make 50% down payments.
There is still one option for buyers looking to secure a loan without these penalties – FHA loans. Currently in Cincinnati, and across Hamilton County, the FHA loan limit is $337,500 and the down payment requirement is 3.5%. FHA loans have different restrictions such as PMI insurance that need to be paid for by the borrower. For more information on how you can leverage an FHA loan, especially in lieu of the tightening loan regulations, contact me at Alison.Moss@comey.com.
Effective December 13, 2008 Fannie Mae will have a new set of mortgage lending guidelines, all in response to the sub prime challenges currently facing the marketplace. The bottom line is that Cincinnati home owners will need to have more equity in their home, or to put it another way they will need to maintain more of thier own money in thier home vs. the bank’s money. Each of the following changes is a 5% increase over the previous set of guidelines.
- Primary residence, “cash out” refinances are limited to 85% loan-to-value
- Second home, cash out refinances are limited to 75% loan-to-value
- Investment properties cannot be refinanced without a 25% equity position
The changes are designed to lower the exposure to lenders, and to make sure home owners have more of stake in their own homes. We are advising our clients who will be looking for homes to make thier move before the changes take effect.
Sunday, the government announced that it will takeover Fannie Mae and Freddie Mac and assume their respective operations. Mortgage-backed debt is now government debt. Our colleague Dan Green, a mortgage broker for Mobium, explains how this impacts American home buyers. Click here for a link to his article.
