Gulf Coast Associates' Blog: Lending News

Fannie Mae announced today it will be scrapping its extra 5% down payment requirement for properties identified as being located in a declining market. The change will affect conventional, conforming mortgages that the company will purchase or guarantee and is an additional part of the company's recent Keys to Recovery initiative.

The company had been under pressure from both Realtors® and industry insiders alike since it adopted the policy in December, 2007. Marianne Sullivan, one of Fannie Mae's senior vice presidents said "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

The new policy will take effect June 1,…

For those of you who follow our blog, you know we try very hard to keep you up to date with all the changes that are occurring in the mortgage lending industry on an ongoing basis. Unfortunately, since around the beginning of March, we have had our hands full trying to keep up with the overwhelming increase in our real estate business due to the fact it was the height of our "season" here in Southwest Florida and business is booming again. Our belief is that what has occurred for us here in our real estate markets this winter will also show up and spread across the rest of the country as we move into summer. At least we hope so!

So, in order to keep you up to date, we have decided to do a synopsis of what has occurred over the last 45 days that should be…

Lots of folks are considering refinancing their current home loans in this falling interest rate environment. The problem is things have changed within the lending industry since many borrowers got their original mortgage or refinanced the last time rates fell. What used to be a simple process has now turned into a journey filled with many roadblocks. The fallout from the subprime mess has brought about all sorts of changes including new FICO score requirements, declining market penalties and the loss of many types of available loan programs. It almost seems like for everything the industry or the government has tried to do to improve things, more new changes occur that set the process back even further.

The latest problem revolves around those…

In response to the new conforming loan limit requirements included in the Economic Stimulus Package signed into law last month, HUD has released it revised county by county median property prices today. Under the Stimulus Package's guidelines, HUD was directed to re-evaluate its median property prices in order to determine the new maximum conforming loan limits for loans originated between July 1, 2007 and December 31, 2008. The actual FHA and Fannie/Freddie conforming loan limits for each county are based upon 125% of these revised median property prices. Some counties, designated as high cost areas, received their new limits based on 175% of the revised median home prices.

So, all counties across the country now have a new FHA conforming loan amount…

The largest private mortgage insurer's in the U.S. are raising their down payment and FICO score requirements for those looking for mortgage financing in “distressed markets” like the states of California, Florida, Arizona and Nevada and in many major metropolitan areas such as Washington, D.C., Detroit, Chicago, Boston and Atlanta. The changes were prompted by heavier than expected 3rd and 4th quarter claim losses and the anticipation of such claims continuing to rise in the foreseeable future.

Update! Additional Metropolitan areas added to the “distressed markets” list include the following locations:

Denver, the Maryland and Northern Virginia suburbs of Washington, D.C., Baltimore, Minneapolis, the Long Island and New Jersey suburbs of New York,…

Like most people, you'd have to think things have gotten about as bad as they can get when it comes to the mortgage lending industry. Between all the new regulations, federal and state laws, consolidations, bankruptcies and the discontinuation of numerous mortgage programs, the next phase of restrictions is taking things to a different level altogether.

Effective January 15th, Fannie Mae (FNMA) is instituting a loan-to-value (LTV) reduction penalty for properties located in declining markets. What does that mean? Well, depending on where you live, it means it just became that much harder to get a home loan. How's that you say? Well, not only do you have tougher guidelines to qualify as a borrower for a mortgage, now the property itself is going to play a…

Two things are for sure in 2008 for the mortgage lending industry; higher borrowing costs and more government regulations. While many say these are the necessary reforms needed to deal with the mortgage debacle of 2007, we see them as the consequences of an industry unwilling to regulate itself. The problem is, the only ones who will truly pay for an industry that ran amok, are the people looking to borrow money to buy a home.

So, in order to right the ship, here are some of the things that will happen, or, are proposed to happen to the industry in 2008. Some are sound changes and should be welcomed. Others are onerous or shortsighted as are most new regulations when the government has to intervene to correct abuses in the marketplace.

Higher Mortgage…

President Bush signed into law today a new measure to provide tax relief for homeowners facing foreclosure or bankruptcy. The bill eliminates federal taxes due from homeowners who have had mortgage debt forgiven as part of a foreclosure or the renegotiation of a loan on their primary residence. Currently such debt forgiveness has been treated as taxable income.

The bill arose in response to the current mortgage crisis and is anticipated to reduce taxes on strapped homeowners by $650 million. "When you're worried about making your payments, higher taxes are the last thing you need to worry about," Bush said at the bill-signing ceremony. With some 2+ million adjustable-rate mortgages scheduled to reset through 2008, the new law will be a nice holiday gift…