Fannie Mae Says We Want Less Business...well not in so many words!

On December 5, 2007 Fannie Mae announced that it will re-institute it's Maximum Financing in Declining Markets Policy.  This policy had been removed by Fannie Mae in January of 2006.  Basically, this policy will reduce the Maximum Loan-to-Value (LTV) Ratios by a pre-determined percentage if markets are considered to be soft, distressed or severely distressed.  These determinations will be made by lenders and appraisers using tools to access housing trends like the S&P/Case Shiller Home Prices Indices, the Office of Federal Housing Enterprise Oversight (OFHEO) Index, and The National Association of Realtors (NAR) Statistics, to name a few.  In addition to this,  when running a loan through Desktop Underwriter (DU) which is Fannie Mae's Automated Underwriting engine, their findings may come back with a market indicator that will automatically reduce the max LTV for that particular loan. 

This sounds pretty bad, huh?  Yes, but there are some outs.  If you can make a case that a property is not in a declining market, Fannie Mae may remove the restriction.  How?  Well your appraiser needs to be able to show reasons why a particular property does not meet the criteria.  Also, the restrictions do not apply to to rate and term refinances that have an existing Fannie Mae-owned or securitized first mortgage. 

This is just another in a long line of factors that WILL send more and more mortgage financing into government loans. 

This policy goes into effect for all loan applications dated January 15th, 2008 or later.

Your mortgage partner for life,  

Rey "Steak Dinner" Gallegos
Senior Loan Officer
Five Star Mortgage
Email: rey@steak-dinner.com
4NevadaMortgageLoans.com
Your complete community mortgage broker
Proud member National Association of Mortgage Brokers
 

6 Comments on Fannie Mae Says They Want Less Business...

Rey - Another interesting reaction to current Market Conditions & Perceptions.  This one I don't completely disagree with.  Thanks for sharing the info.

12/10/2007 01:04 PM by Jason Sardi, Pennsylvania Mortgage Broker (First Choice Equity Group Inc.)

Hi Rey,

Thanks for the tip.

Sincerely

Tom Braatz

12/10/2007 01:14 PM by Tom Braatz, South Eastern Wisconsin (Tom Braatz)

Rey, Another Great Post...Great info for everyone. 

12/10/2007 03:50 PM by My Favorite Mortgage.net - Matthew J Blum

Rey, you always post such informative stuff!  Thanks so much!

12/10/2007 10:02 PM by Mary Warren, Las Vegas Real Estate (Keller Williams Southern Nevada)

It sounds like using an appraiser that knows his stuff will be important.  Thanks for the information.

12/11/2007 12:21 AM by Fran Gatti - Crescent City CA Real Estate (RE/MAX Coastal Redwoods)

Hey, is the bar closed? I thought Fannie was serving 24/7. Fannie, she's a fine girl, what a good wife she will be...

Are they all loaded up with under-performing loans? Amazing. Steak, you are one  mortgage man who is constantly tracking the market.

12/11/2007 08:47 PM by Andrew J. Lenza (ABR*GRI*MBA) Monmouth County NJ Real Estate Broker (Andrew J. Lenza Realty)

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Loan Officer: Rey Gallegos Home Loan Consultant Las Vegas, NV (A Mortgage Bank)
Rey Gallegos Home Loan Consultant Las Vegas, NV
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