Fannie Mae is changing their guidelines again that will make it harder for First Time Home Buyers with little money to buy a home. Currently the My Community Loan Program allows for up to a 6% seller paid closing costs. This is changing on December 1st, the maximum is now going to be only 3% seller paid closing cost. This will mean it will be very hard for a buyer to get into a property with little to no money because closing costs are typically more than 3%.
Now whether this is good news or bad news depends on your prospective.
I think this is bad news - This program was designed to help first time home buyers. I never understood why the restrictions anyways. If the seller wants to pay for all of it "WHY NOT"
It's going to limit the first-timer ranks to some degree. It just tells us that the investors are still jittery about buying mortgage-backed securities where the borrower doesn't have much of a stake. Good update.
I think that the new buyer should rent if not able to comply. I don't want to get caught in the chain reaction when the 1st buyer in the chain disapears.
It is really disappointing. I never used the full 6%, but the other kicker was qualifying on a 30 year fixed, with a 10 year interest only, 100%LTV. The hits to price went through the roof starting last June. Looks like the lender with the best MCM pricing is close to being on the skids, GMAC. Oh well.
I've seen that Fannie Mae has also made EAII and EAIII counter offers ineligible for the My Community mortgage. At the same time, Desktop Underwriter tends to be giving more EA counter offers. This and the elimination of FHA Down Payment Assistance will add more barriers to homeownership.
Yes, Fannie Mae got rid of EA2 & EA3 on My Community 100 and EA3 on My Community 97 as of November 1st. Fannie Mae Desktop Underwriter seems to look for Reserves, so with no reserves you tend to get the level responses. If you get a level with Fannie than try and run it through Freddie Mac and see if you can get it approved.
Yes there are still more changes coming. Fannie did announce price hits for borrowers with below 680 credit scores and FHA is talking about going to risk based pricing for the mortgage insurance premium. Right now FHA doesn't charge anymore money for mortgage insurance based on credit score.
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It is disapointing news. My Community was designed to help first time homebuyers and ths will really make it more difficult for some to buy a home.
Sean Allen