Much has transpired in the past 12 months, but none more important that the guideline changes announced by Fannie Mae back on September 5, 2008.
Within Announcement 08-22, Fannie Mae provided updates and clarification on the new guidelines scheduled to be implemented in the months to come. As of today, almost all changes have been implemented since the upgrade to Fannie Mae's automated underwrite system, more commonly known as Desktop Underwriter (DU).
One of the most notable changes came in the form of restrictions based on the maximum allowable loan-to-value for all new loan was designated as purchase money, rate/term refinance or cashout refinance.
Do you know what all this means to you?
If yes, you then understand the difficulty & reality of the credit crisis.
If no, please contact my office so that one of the qualified mortgage professionals can give you proper guidance for your situation.
During the holiday season, many find comfort in the traditions that have been passed on from generation to generation. I personally enjoy the gathering of family to enjoy the new found awareness of children to the whole spectacle we call Christmas. From the "I love Santa" chants to the "I am scared of the Grinch" whimpers, the innocence of children bring a purity to the entire decision making process of buying gifts, wrapping presents, singing, etc...
This is a sharp contrast to the recessionary woes that has overwhelmed the public. The dynamics of the U.S. and global economy are changing as quick as the weather. With today's uncertain landscape for housing, the financial markets, future economic growth and employment many have been paralyzed to make changes in their lives.
The continuous blitz in the media of negative headlines has essentially perpetuated the downward spiraling effect as households across America have begun to retrench in the safety of non-decisions.
This is clearly evident for consumers who are "On The Fence" for a mortgage transaction, whether it is for a home purchase or a refinance.
No matter the metric, either 1% reduction or $100/mth savings, consumers have become reluctant to change.
For example, we had a client during the month of August that could have saved nearly $1500 per month through a cash-out refinance that would have restructured their entire debt obligations into a 30 year fixed mortgage. At that time their mortgage rate would have been 7%. They were excited about all the positive things they could do with this new found savings. Unfortunately, they were not committed to move forward.
As with all of our clients, we continued to monitor their options. Mortgage rates did trend downward eventually once Bernanke and the FED made a formal announcement that they were committed to buy agency mortgage-backed assets.
We went back to the consumer earlier this month to inform them that rates had dropped close to 5.25%, which would have saved them an additional $200/mth for a total monthly savings of $1700. Believe it or not, they apologized and stated that they were scared to move forward and commit to a refinance transaction at this time.
At this point, you may be wondering about the sanity of this couple. I will only state that one is a lawyer and one is a hospital administrator. Even educated consumers have succumbed to recessionary fears and are timid to move forward.
Since all eyes are on stabilizing the housing market, what will it take to get consumers to commit to action?
If you agree with the National Association of Realtors and the National Association of Home Builders, mortgage rates have to be near 4.5%. If you follow the entertaining guidance of Mad Money's Jim Cramer, mortgage rates have to be as low as 3.5%.
It appears that everyone is trying to chase and capture the ever allusive white elephant. Speculation on where mortgage rates should be has only intensified the hesitant nature of today's consumers.
The Grinch has stolen something even more important this year, he has stolen the confidence of consumers and broken their will to endure this economic downturn.
What will you do to stop the Grinch?
Can you feel it? Can you hear it? Can you see it?
I am not talking about the weather or Barack Obama.
During the weekend of December 13th, major updates were implemented by Fannie Mae (FNM) that will influence home financing for years to come. These updates are a game changer and will have an impact for homeownership and the wealth affect.
All the updates, which encompasse a plethora of underwriting guideline changes, are to FNMs automated underwrite system (aka. Desktop Underwriter/Originator) that all consumers are required to be processed through for both agency and FHA insured mortgage products.
FNMs Desktop Underwriter (DU) is now called DU Version 7.1. Any automated approvals that have a prior DU Version will be scrutinized and potential denied per new guidelines.
The biggest change came in the form of loan-to-value (LTV) eligibility requirements. LTV simply references how much equity one would have either from a down payment or home price appreciation. Let's review some of these changes.
Principle Residence:
Second Homes:
Investment Properties:
Another update that went under the radar was a Bankruptcy Policy Change. Specifically, the minimum allowable time period between the file date of a bankruptcy will be extended from 24 months to 48 months.
This will be disheartening for consumers who were able to buy a home several years ago at one day out of bankruptcy and will have no option to refinance due to guideline changes. It will also make it more difficult for buyers who have to seek shelter through the bankruptcy courts during this historic economic downturn.
Ready or not, change is here.
Can you feel it? Can you hear it? Can you see it?
I am not talking about the weather or Barack Obama.
During the weekend of December 13th, major updates were implemented by Fannie Mae (FNM) that will influence home financing for years to come. These updates are a game changer and will have an impact for homeownership and the wealth affect.
All the updates, which encompasse a plethora of underwriting guideline changes, are to FNMs automated underwrite system (aka. Desktop Underwriter/Originator) that all consumers are required to be processed through for both agency and FHA insured mortgage products.
FNMs Desktop Underwriter (DU) is now called DU Version 7.1. Any automated approvals that have a prior DU Version will be scrutinized and potential denied per new guidelines.
The biggest change came in the form of loan-to-value (LTV) eligibility requirements. LTV simply references how much equity one would have either from a down payment or home price appreciation. Let's review some of these changes.
Principle Residence:
Second Homes:
Investment Properties:
Another update that went under the radar was a Bankruptcy Policy Change. Specifically, the minimum allowable time period between the file date of a bankruptcy will be extended from 24 months to 48 months.
This will be disheartening for consumers who were able to buy a home several years ago at one day out of bankruptcy and will have no option to refinance due to guideline changes. It will also make it more difficult for buyers who have to seek shelter through the bankruptcy courts during this historic economic downturn.
Ready or not, change is here.
Can you feel it? Can you hear it? Can you see it?
I am not talking about the weather or Barack Obama.
During the weekend of December 13th, major updates were implemented by Fannie Mae (FNM) that will influence home financing for years to come. These updates are a game changer and will have an impact for homeownership and the wealth affect.
All the updates, which encompasse a plethora of underwriting guideline changes, are to FNMs automated underwrite system (aka. Desktop Underwriter/Originator) that all consumers are required to be processed through for both agency and FHA insured mortgage products.
FNMs Desktop Underwriter (DU) is now called DU Version 7.1. Any automated approvals that have a prior DU Version will be scrutinized and potential denied per new guidelines.
The biggest change came in the form of loan-to-value (LTV) eligibility requirements. LTV simply references how much equity one would have either from a down payment or home price appreciation. Let's review some of these changes.
Principle Residence:
Second Homes:
Investment Properties:
Another update that went under the radar was a Bankruptcy Policy Change. Specifically, the minimum allowable time period between the file date of a bankruptcy will be extended from 24 months to 48 months.
This will be disheartening for consumers who were able to buy a home several years ago at one day out of bankruptcy and will have no option to refinance due to guideline changes. It will also make it more difficult for buyers who have to seek shelter through the bankruptcy courts during this historic economic downturn.
Ready or not, change is here.
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Northwest Indiana Mortgage Planner Facilitating the American Dream through Responsible Mortgage Lending since 1999. Want to Know More? Contact Me!
...was created with the specific purpose to help homeowners achieve their dreams. We lend with integrity, customer centricity and competitiveness. Our product is ADVICE. Our special valued service is a TEAM approach through a growing synergy of influence. Our competitive edge is a qualified staff of Certified Mortgage Planning Specialists. We are trusted mortgage planners to an ever-broadening base of clients nationally.
OUR VISION is to become an industry leader and one of America’s premier mortgage planning companies. We will journey towards greatness with the support of people who care while openly sharing our successes.
Our clients will come to The Barath Group for personal, responsive and attentive service. We want to assure them that we will respect the confidentiality of their private choices. Additionally, our unique philosophy gives us the opportunity to enhance our relationships, to bridge paths, and to offer poignant advice. While most lenders spend their time looking for the "next" client, we spend our time implementing systems designed to nurture our client's aspirations for all of their life successes.
OUR MISSION is to facilitate prosperity, to empower ideal growth and to promote community stewardship. We will achieve these goals collectively by the process of our passionate interconnected outreach.
We pledge to be advocates for our customers. We want to put them at the center of everything we do. We strive to develop Client's for Life by exceeding our client's expectations. We want our clients to be so satisfied that they become Ambassadors to our success. Accordingly, our clients will gladly REFER us to their family, friends, and business associates who are in need of a certified mortgage planning specialist.
We want to be known as LIFE FACILITATORS offering sound financial advice, implementing innovative & highly competitive mortgage strategies and fostering an affinity towards success for all. We also want it known that The Barath Group understands the value of people and that we encourage building deep relationships. In conclusion, we want to totally satisfy our customers' mortgage needs as the gateway to their dreams.
Please visit www.MyBenchmarkMtg.com to learn more about the TEAM and how easy it is to get started.
As a Certified Mortgage Planner, I understand the difficulties facing consumers in today's credit driven market. An individual's credit score has never been more important with all the turmoil surrounding our financial markets.
In order to best prepare a consumer for homeownership, one must start with proper education. For those consumers who already own a home it still may be a good time to seek more knowledge.
Through a serious of seminars, workshops and mastermind groups, we provide education to our clients and the professionals who have impact on the financial well-being of families throughout the community.
These professionals include Certified Public Accountants, Certified Financial Advisors, Estate Planners, Insurance Advisors, and Legal Advisors along with Realtors, small business owners, school districts, etc...
The best way to stay ahead of a financial crisis is to stay in the know through a circle of professionals that are committed to ongoing education in order to provide real options that are current.
Thank you again for allowing my TEAM the opportunity to work with you. As a token of our continued appreciation, I have purchased an ongoing subscription to YOU Magazine on your behalf.
An online magazine that is delivered monthly, YOU addresses topics of interest to you. Contributing authors include such experts as Tony Robbins, Ivan Misner, David Allen, Kiplinger's experts and many, many more.
Still not sure what you will find in YOU Magazine?
Take a few seconds and browse a preview of YOU Magazine as I know that you will want to subscribe. Feel free to pass it along to friends, family and business partners!
As a part of this subscription package, you will receive timely alerts that will keep you apprised of the latest events in the mortgage and real estate industries. This means you will always be ready when a friend or family member has a question about what to do in today's ever-changing market.
Please be in touch if you have any comments on these items, particularly those where you'd like additional information. Thank you again, and I look forward to speaking with you soon.
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