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Georgia & Florida Labeled Declining Markets

Georgia & Florida Labeled Declining Markets

March 3, 2008 Fannie Mae will expand their list of geographical areas considered "Declining Markets" So what does this mean for potential borrowers?

In a recent Fannie Mae memo: If the subject property is determined to be in a declining market, the maximum LTV/CLTV must be restricted by at least 5% less than the maximum allowed for the transaction. All loans are subject to underwriting approval and additional conditions may need to be met with a loan in a declining market. Please keep in mind that transactions located in (several states including Georgia and Florida) will be limited to a max LTV/CLTV of 95%. For example, if the loan would be eligible as a standard mortgage, the maximum financing of 95% would be reduced to 90% in a declining market. If a loan is submitted to automated underwriting for 100% financing with Flex 100 (special Fannie Mae 100% program), but the subject property is located in a declining market, the maximum financing would be limited to 95%. These new declining market areas will go into effect March 3rd, 2008.

MY ADVICE: Keep in mind that Fannie Mae will honor commitments for 60 days as long as they are locked before March 3rd. If you are seeking a high LTV purchase, I would get out and try to find a house asap. There are certainly a lot of bargains out there. If you are thinking of refinancing, I would make sure that you lock in your loan before March 3rd. Even if you decide that you don't want to proceed with the transaction, the lock in cost nothing. Really the only thing you have to risk is maybe the cost of the appraisal.

Stephen Katz

Katz Mortgage Team

866-742-8400

Posted by Stephen Katz on 02/19/2008 09:52 AM

Comments (3)

declining market, georgia, florida, ltv, fannie mae, borrowers

3 Comments on Georgia & Florida Labeled Declining Markets

does anyone know if the mortgage insurance compaies are required to honor all locks recieved before March 3rd as well? i had a loan about to close and they would not close it due to the fact that the mortgage insurance companies would not insure the property to 88% cash-out due to the property being located in a declining market. thanks in advance

02/28/2008 02:12 PM

by Blaise Scaccio

Use a different Mortgage Ins company or do a piggyback.

Stephen

02/28/2008 02:18 PM

by Stephen Katz, KatzMortgageTeam.net

We are suffering through the declining market illness as we speak. A home that was 450K 2 yrs ago, I have under contract for over 100k less today. We were pre-approved, then approved. We met the 10% down requirement; now, the loan broker is getting cold feet because the specific buyer of the loan they were shooting for is concerned about the declining mkt. So, it appears that:

1. We put down a significant amount of money in escrow with our offer that will

2. Be lost if we do not close in a few days and

3. we have followed all of the requirements, met the new ones and will still possibly lose out because the home happens to be in florida.

So, how will Florida's real estate market hope to recover if lenders who clearly state that they will lend in Florida under specific perameters do not, and why does the state allow lenders who do this to continue to conduct business in that state?

03/26/2008 01:32 PM

by second home fever

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