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Fannie Could Curb Low-Down-Payment Loans

By Bill Ladewig

Mortgage and Lending with LoanOfficerSchool.com NMLS 291249

August 19, 2013 02:07 AM

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MORTGAGE and REAL ESTATE NEWS

Fannie Could Curb Low-Down-Payment Loans

By Nick Timiraos - Fannie Mae is in discussions to curb its purchases of mortgages that require a minimum down-payment of 3%, according to people familiar with the discussions.

Fannie never stopped accepting purchases of loans with 3% down payments, even after lending standards were ratcheted up following the housing bust. But many lenders stopped offering them, in part because they weren't able to obtain mortgage insurance for those loans, which Fannie requires. >>Read More

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Thank goodness Fannie/Freddie can't kill off the No Down Payment Veterans Admin home loan.

Which, BTW, has the lowest default rate of all mortgages.

Down payment has nothing to do with defaults. Careless underwriting does.

Aug 18, 2013 11:46 PM

Bill Ladewig

LoanOfficerSchool.com - Escondido, CA

Experience Is Your Advantage

Lenn, you are exactly right. VA has the lowest default rate and 100% loan to value. Residual income, monthly income remaining after all bills have been paid is a key ellement in the VA underwriting process and, I think, one of the reasons for VA's success.

Thank you for your comment.

Aug 19, 2013 12:27 AM

Dan Hopper

Dan Hopper - Gold Way RE - Westminster, CO

Colorado Broker / Referral Services

Lenn, I would have to agree with you, as well. Over the last 13 yrs of working short sales / short pay-offs, I have done about 75 of them, and only 2 times where there a VA loan involved!! One from a death of the Vet, and the other due to needing to relocate to be closer to family (in their 70's). Down payment amount has NOT been the issue!

Dan, thanks for your comment. I will add that historically, FHA has been one of the few, if only, government bureaucracy that paid for itself. FHA also has a better track record than conventionall loans.

I believe the proposed changes to FHA, Fannie and Freddie are more about satisfying big banking interests than helping stabilize consumer lending.

Aug 19, 2013 01:45 AM

I remember when the MIP was sufficient to be actuarially sound. Then Congress stepped in and lowered it to about 1.75%.

Of course, that produced a huge deficit. So, the government stepped in again and raised it to far more than needed to be actuarially sound.

Now, they have a surplus again and the government wants to use it to help fund Obamacare.

We're doomed.

Folks wonder why I'm cynical.

Aug 19, 2013 06:02 AM

Lenn,

You are not cynical when you tell the truth.

Aug 19, 2013 06:33 AM

Fannie Could Curb Low-Down-Payment Loans

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