For First Time Home Buyers in Southern Oregon, I typically recommend the Oregon Bond CashAdvantage program when the buyers lack a down payment, so the elimination of the Freddie Mac 100 program will not have much effect on my business practice. I received the following today from one of the lenders:
"ELIMINATION OF THE FREDDIE MAC 100 LOAN PROGRAM - Effective for Locks on or after Monday, March 17, 2008 In response to the continued deterioration of credit quality and declining home values in most areas of the country, Freddie Mac is eliminating the higher risk Freddie Mac 100 loan program. As a result of this change, effective for locks on or after Monday, March 17, 2008, the Freddie Mac 100 loan program is being eliminated. All loans that are locked PRIOR to March 17, 2008 will be honored; however, these loans must be closed and funded by May 15, 2008. Lock-in extensions and re-locks will NOT be granted."
The lender went on to spell out the specifics on other tightened guidelines they have, including their mortgage insurance:
"IMPORTANT INFORMATION REGARDING UPCOMING AGENCY UPDATES - Revised Minimum Credit Score Requirements and Cash-Out Refinance Eligibility for Transactions Requiring Mortgage InsuranceDue to continued mortgage insurance (MI) company product eligibility pull backs, we must implement the new minimum credit score requirements and cash-out refinance eligibility changes outlined below for our conventional Agency loan programs. These changes will be effective for locks on or after Friday, March 14, 2008. All loans that are locked PRIOR to March 14, 2008 will be honored; however, must be closed and funded by their original lock expiration dates. Lock-in extensions and re-locks will NOT be granted.
• For ALL traditionally underwritten, DU "Approve/Eligible" and LP "Accept/Eligible" Agency loan transactions:
• a minimum 620 credit score (for ALL borrowers) will be required for LTVs 80.01-95%, regardless of the AUS approval, and
• a minimum 680 credit score (for ALL borrowers) will be required for LTVs 95.01-100%, regardless of the AUS approval.
• The maximum LTV on 1 unit second home cash-out refinance transactions will be reduced to 80%. Maximum allowable TLTVs remain unchanged.
Note: Although locks will be accepted through end of business March 13, 2008, the MI commitment MUST be obtained in accordance with the MI companies' effective dates as outlined on the Competitive Analysis of MI Guidelines Matrix. MI coverage will NOT be available after these effective dates, regardless of when the loan was locked. At this time, all other minimum credit score requirements (i.e., for LTVs 80% or less, etc.) remain unchanged."
Are you starting to feel like every transaction is a race to the finish line? We're in a changing market, heading in to our Spring/Summer selling season. Buyers need to choose strong, knowledgeable professionals who keep in close communication with them during this very volatile time we are in. We, as lending professionals, cannot always count on being given enough advance warning to make sure transactions that are in process close under the original terms buyers are expecting, but with diligence and attention to detail, we can sure try!
See you at the Closing Table - and the Finish Line!
Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com
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Putting my 25 Years of Quality experience to work for you! From the First-Time Homebuyer to the seasoned Investor, I'll work with you to determine the best Quality loan program that suits your needs
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OUCH! Thanks for the update.
Joan - Sorry to be the bearer of bad tidings. There ARE still alternatives out there for buyers who don't have a down payment. I like the programs through the local Housing Finance Agencies for each State. Does your local Housing Agency offer low-to-moderate income borrowers assistance? Nehemiah is still a viable option (so far!) for FHA buyers, so there is that alternative, too.