Yep, Whos Waggin the Dog? The PMI companies are. This week is a definitive moment in our, so called, Affordable Lending Stratosphere. All of these programs under the titles of "Emerging Markets, Gold, Flex, Affordable, blah, blah, blah"......Gone.. The Private Mortgage Insurance companies are changing the rules of the game drastically.
If you are in a Declining Market, your client must have a 720 minimum fico score to be the lucky contributor of 10% down payment of their own funds. That's right, their own funds. The days of gift money are over. Sure they can be gifted any amount beyond the customers contribution of their own funds of 10%.
If you are in a stable market, 5% down with a 660 fico score. So, we are truly in a bit of a caper my friends. It is apparent that affordable lending is at it's end. What about FHA? you say..... January 1st, that down payment becomes 3.5% for the borrowers contribution and we all know that down payment assistance programs are gone.
To keep our economy going, slashing these programs is not the answer. The PMI companies are looking at loss mitigation. An interesting dilemma that they are in, if you ask me. How did they get here? Well, they insinuated insuring Expanded Criteria Programs with Fannie and Freddie a long time ago. They were allowing all of these high risk loans into their pipelines. All under the guise of Affordable Lending.
If you have children or grandchildren, you can feel truly uneasy now knowing that there is no way that the, so called, "American Dream of Homeownership" is going to happen. We are looking at more homeless people and more slum lords to make their way into the mix. How can we move forward if people cannot afford to find a place to live?
It's called, Wag the Dog, and I don't like it at all...........
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