Mortgage News Update

Fannie Mae changed the rules for condo purchases. 70% of new projects (new construction) must be sold in order to qualify the unit as a Fannie Mae project. In the past, 51% of the units had to be under contract. Fannie Mae has tightened the guidelines in order to prevent further loss of revenue from these projects. If 70% of the new projects are not sold, financing has to come from other sources.

Warehouse lending has become more difficult. In 2003, at the height of the mortgage industry, more than 50% of the Mortgage business was originated by Mortgage Brokers. Now, only about 16% of teh business comes from Mortgage Brokers. A huge amount of Mortgage just got out of the business. It has become more difficult for them to be in business due largely to government regualtions.

Mortgage Brokers still in business are more qualified and have to work harder to stay qualified. Also, it is a challenge to stay tuned with the constant changing of the rules. Mortgage Banking is another option for originating a loan. In those cases, the loans come from the bank. So, the client buying the home still has choices. it is just the view on the inside of the industry that looks very different.

The good news is: home buying affordability is way up! When one considers the price of homes being very low, interest rates historically low, and the $8,000 first time home buyers tax credit make it an incredible time to buy a home. What an incredible opportunity!

In terms of what is going on in the Mortgage Industrym the pendulum has definitely shifted from the philosophy of everyone should be getting a loan to people must be qualified to buy a house.