.....AND THROW IT IN THE TRASH!!!

I have been in the mortgage business for 9.5 years now and I feel like a brand new Loan Officer. 

In the state of Michigan, Fannie Mae has ruled that MOST of our state is considered an area of "declining markets."  They say MOST of the state of Michigan is but I haven't ran across a zip code that ISN'T.  So the days of No Money Down programs in Michigan in the Conventional Loan world is gone.  Yes, the lenders offer them but Fannie Mae is saying that if a home is in an area of declining markets, the customer MUST put 5% down.  So in Michigan, the only way you're going to purchase a home with No Money Down is with an FHA loan with Down Payment Assistance (FHA does not have the 'declining markets' issue). 

So sharpen your FHA pencils, Michigan agents....because that's going to be the trend.  Keep in mind that we still have to pay attention to the FHA Maximum Loan Limits per county.  To check the maximum Loan Limits, follow this link:  https://entp.hud.gov/idapp/html/hicost1.cfm

Because there are A LOT of deals that are coming in on Foreclosure Homes, be VERY careful of any safety issues that might come up in the appraisal and talk about them to your potential buyer.  What we are finding is that the foreclosing bank will NOT pay for any necessary repairs so it becomes the responsibility of the buyer to fix any issues.  I had a deal where the previous owner took all or most of the light fixtures and the wiring was exposed.  The lender was requiring that the hazard was remedied BEFORE the closing and that threw everyone for a loop.  But save yourself from any potential headaches....take a little more time in the beginning and it'll save you a lot of headache in the end. 

In today's market, the appraisal will make or break a deal regardless if you have a buyer with 700 credit scores.  So again....what we used to know.....throw that out the window. 

I was talking to a friend of mine that loves going to the casino about the market and I could only give the following analogy in order to explain how the lenders are reacting:

You take the last $500 you own to a casino.  The first $1 you put in and lose, you really aren't worried yet.  $20 is lost and you're still not worried.  When you have lost $450 of the $500 and you haven't won anything yet, you start to get worried and really start considering other options.  When you get down to your last $10, you really want to KNOW that one of those last dollars is going to perform before you put it in the machine.  Well, we have seen many lenders have gone under because they spent their last $10.  The ones that are still out there are on their last $10 so they want to KNOW that their loans will perform. 

In other news, bonds are having a favorable day after losing -144 basis points over the past few days.  So time and time again, news of the Fed's Fed Funds/Discount Rate does not really translate into lower mortgage interest rates.  As of today, we could offer a 30-year fixed at 5.50% for purchase transactions over 170k with credit scores over 680. 

Have a GREAT weekend!

Santos