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Line Dancing: More Than A Country Music Fad

red I was never any good at line dancing. Nor did I look good in tight jeans, boots, and a cowboy hat. But the line dancing this post refers to isn't done to a Brooks and Dunn song. The DJ in this case is Fannie Mae. The tune they are playing is the "Declining Market Value" boogie.

Pretty much the entire state of Florida has been declared a sinking ship. Fannie Mae has red-tagged us with a 5% off sign, and our wholesale lenders have in turn reduced the loan to value limits in kind. On a 100% product, I can now only lend up to 95%. Needless to say, this has affected our ability to get loans done. With declining property values, appraisals are coming in low. Combine this with Fannie's move and there are a lot of people who can't get financing.

Which brings me to the topic of "redlining". You can't legally discriminate based on geographic location when providing loans. Most of the time, the "redlining" dance has referred to minority or poor areas. But isn't it dangerously close to circle the state of Florida with a red Sharpie and significantly hamper our ability to originate loans in this area? It's as if they have found a legal way to discriminate against the Sunshine State and it's a dance I'm not enjoying.

Lots of AR folks are in a "Declining Market" and I'd be curious to see if anyone else has an "Achy-Breaky Heart" courtesy of our friends at Fannie Mae. As for me, I'm ready to stop dancing, and grab a "Beer in Mexico".

Posted by Mike Tullio, Blue Skye Lending on 01/22/2008 05:22 PM

Comments (10)

interest, rates, the fed, mortgages, problems, loans, lender, florida, bradenton, redlining, price, economic, manatee county, declining

10 Comments on Line Dancing: More Than A Country Music Fad

Yepper, Close similarity between the comparisons for Redlining. I agree ... It kinda sucks.

Sean Allen

01/22/2008 05:36 PM

by International Financing Solutions

I don't know... Isn't that the same thing that the insurance industry is doing in Florida with folks unable to get flood or hurricane insurance? No wonder people are leaving Florida in droves. We're catching a lot of your folks coming up this way.

01/22/2008 05:49 PM

by Jon Miller (United Country-Marshland Realty)

We are seeing some of that happening in Northern Virginia as well. It can slam the door on a deal that looked like it was going along just fine and then SLAM nope you don't have your financing...see ya!

01/22/2008 06:02 PM

by Cindy Jones-Northern Virginia Real Estate & Military Relocation Services (RE/MAX Allegiance #1 RE/MAX Company in the World)

Sean. Glad I'm not the only one seeing this. Well, not exactly glad, but we're all feeling the pressure and I suppose we can take comfort in shared pain.

Jon. Good example. AllState got a huge wake-up call in Florida when they had all a moratorium placed on them last week and they couldn't write any new policies because of various legal violations. I'm not surprised people are crossing the North border!

Cindy. It is a deal breaker in a lot of cases. Glad I'm a broker and at least I have options, even if they are disappearing. It's always good to have a Plan B (and C)!

01/22/2008 07:57 PM

by Mike Tullio, Blue Skye Lending

Does anyone have a suggestion on how to word the appraisal or what kind of supporting documentation can convince a lender not to apply the 5% reduction?

01/22/2008 08:34 PM

by Jeff

Mike, Aren't they the same "bastards" (I mean this lovingly, of course) who so willing accepted inflated appraisals which got us into this mess to begin with?

01/23/2008 05:11 AM

by Bradenton Florida Real Estate - Dan Forbes (Sarasota Metro Properties)

Jeff. A couple things to consider. The appraiser has the prerogative to comment regarding the property being in a declining market or under adverse marketing conditions. They are required to disclose this. If there is evidence to support an upward, or at least stable, sales trend, they can leave that language out. You still have the potential for the underwriting findings to tag your property in a declining market as well. There's not a lot of options to work around the issue unless you find a lender who is more flexible on these issues. Good luck.

Dan. Got to give you an AMEN on your comment. Funny how that isn't mentioned when they're shooting down our appraisals now.

01/23/2008 08:50 AM

by Mike Tullio, Blue Skye Lending

Mike, I enjoy reading your posts. Trying to make sense of the rules is getting harder every day. I don't think this is redlining, but that doesn't mean it's fair. These kinds of rules could soon be spreading all over the county. Good luck to you!

01/23/2008 04:54 PM

by Kevin Hancock - The Hancock Mortgage Team (The Legacy Group; Capital/Mortgage/Escrow)

Thanks Kevin. I agree with you. The rules are changing daily. It's like playing Candyland with a 3 year old. Throw out the spinners, cards, and dice; they go where they want to go. We just have to be aware and always have a plan B! Good luck to you as well.

01/24/2008 09:15 AM

by Mike Tullio, Blue Skye Lending

I've been in this game long enough to see 3 major crisis,

1982 - 12% -16% mortgage rates

1990 - Savings & Loan crisis

2005 - Subprime market failure

This to will pass. Pro stand up to the plate, dig in and focus on getting on base or advancing a runner.

I'm listening to a great stepping tune right now.

06/12/2008 02:26 AM

by Find a Notary Public | needAnotary (QEC Internet Services)

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