In December 2007, Fannie Mae instituted a requirement that maximum loan-to-value ratios be reduced for loans they make on properties deemed to be in a declining market area, either by the appraiser or by secondary verification sources such as Moody's/Case-Shiller House Price Index.

Depending on which list you look at, cities in Jackson County, Oregon may or may not be included. Updates are being announced by the lenders, and one lender recently deemed all of California and Florida as declining market areas, but does not list Jackson County, Oregon cities. We may not find out for sure on a purchase transaction until you have located your property and we may run the address through the automated underwriting system.

So what does this mean for the average home buyer? You might need to plan on coming to the table with 5% more of a down payment than you previously planned on if you are going with a conventional loan program. For the home buyer choosing the 100% financing program, you may now need 5% for a down payment; for the 97% home buyer, you may now need 8% down payment; and so on.

More home buyers are choosing FHA financing due to these rapid changes. But, FHA programs are also in the process of being updated with guideline changes headed down the pipeline.

If you have been pre-approved for your financing and are presently shopping for your home, you should check in with your mortgage consultant and verify these changes will not affect you.

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - http://www.quality4loans.com/

UPDATE: As of 6/1/08, MGIC put Jackson County Oregon on their Restricted Markets list. Fannie Mae revised their Declining Value Area requirements, no longer requiring the 5% reduction in maximum loan-to-value ratios for their high-LTV programs. Hopefully the mortgage insurance companies will soon follow suit, so first time home buyers are not required to come up with a minimum of 8% for their down payment.