This industry has gone, well, let's just say, completely bonkers.  With mortgage guidelines changing almost on a daily basis, it's hard for even the seasoned professional to keep up.  Buyers who were approved just 6 months ago, now may be ineligible due to tighter lending restrictions.

Now let's add to the craziness...mortgage rates and the upcoming Fannie Mae and Freddie Mac changes and we are ALL affected...the buyer, the Realtor and me, the mortgage consultant.  The buyers approved even 1 month ago could be tossed to the curb, fast.

You're probably thinking, "What in the world is she talking about??  Mortgage rates are at a 2 year low!"  You're absolutely right.  For the moment, everything looks great.  But, for buyers just "kickin' the tires" or waiting for the Spring Market, they could be terribly disappointed come March 1st.

First the good news...We all have a little time!  It's only December and with a little communication to our buyers, we can inform them and help them to move forward before these ugly changes take place.

Here's the dirt:  As of March 1st, 2008, Fannie and Freddie are implementing new Loan Level Price Adjustments (LLPA's), of up to 2 points, that will affect buyers under a 680 credit score, who are not making a down payment of at least 30%.  Who makes a 30% down payment anymore???  And how many buyers have a credit score below 680?  We are talking about a whole lot of people.   

This implementation will raise rates and ultimately out-price some buyers right out of the market.

What can we do?  Get out and talk to people!  Share the news.  For once, Fannie and Freddie have made an announcement with a little time to spare.  Get out and start talking.  I am and the information has been much appreciated.

Sherri Sherpy

Minnesota Mortgage Loan Consultant