My Community Loan Program Changes

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

 Fannie Mae has just announced two program changes to the My Community Loan Program which will have significant impact on future My Community Loans.

The first change is that effective immediately Fannie Mae is requiring that 1 point be charged on all My Community Loans.  Fannie Mae is calling to this cost a “Risk Adjustment”.  This additional cost is across the board for ALL Lenders, they are not making any exceptions.  This 1 point risk adjustment can be included in the Seller Paid Costs that Fannie Mae allows on My Community Programs, but no matter how you look at it, it is an additional cost.

This change could have a very negative impact on Buyers who might have had enough money for closing costs prior to this change, but now are not able to come up the additional money.  My Community is a 100% Loan Program, so Borrowers who apply for this loan usually have very little money, this means any additional cost can have a tremendous impact, much less a full point added on to the closing costs.

The second program change that Fannie Mae recently announced was on the Expand Approval Level 2 Loans (EA-II).  Effective July 22, 2007 EA-II Loans will no longer be eligible for the My Community Program.  Also any Automated Underwriting (DU) approvals prior to this date must close by August 24, 2007 in order to take advantage of the prior approval.

This change will have a significant impact on the Borrowers monthly payment, because of the additional PMI costs.  The PMI multiplier for a My Community Loan is .59 as opposed to a regular EA-II which has a 1.42 PMI multiplier.  What this means is that a My Community Loan has a $49.17 PMI payment per every $100,000 borrowed, as opposed to an EA-II Loan which will have a $118.33 PMI payment per every $100,000 borrowed.  That is a huge difference, and could be the difference between a Borrower qualifying for a loan or not.

These are the first changes that I have received to 100% Loan Programs, but we have all been expecting changes to happen.  Hopefully there will not be many more, but it is very likely that others will follow in not only the 100% Loan Programs, but also in other Loan Programs.  As I learn about more of these changes I will pass them on, so stay tune.

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Rainer
98,203
Danny Smith
DISCOVER TEXAS HOMES - Round Rock, TX
None of my clients have used this program yet. But the mortgage company I refer the most is Offering the program.
Jun 21, 2007 06:21 AM #41
Rainer
33,323
SHAUN WREN
LICENSE IS NOT PLACED - Lakeland, FL
Thanks for to update. Great information.
Jun 21, 2007 06:37 AM #42
Rainer
151,716
Cynthia Sloop
Community Association Manager - Indianapolis, IN
George, thanks for the update on the my community program.  With Bob on the road now, I haven't been made aware of these changes and I'm in the process of negotiating a purchase agreement on one of my listings.  I believe that they are using this program.  I will now check with the L/O to make sure they know that I know about the changes and the pre-approval letter given me better be based on these changes.
Jun 21, 2007 07:25 AM #43
Rainer
96,075
Jason Price
Mortgage Financial Group, Inc - Eustis, FL

George,

Thanks for sharing this info... I can't wait to see what the next round of tightening will bring.

Jun 21, 2007 08:47 AM #44
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Danny, it is a great program.  100% financing with a low PMI factor.

Shaun, you are welcome.

Cynthia, you need to just make sure that they still have enough money to cover the 1 point that will now be added to the closing costs, everything else should remain the same.

Jason, let's hope that it will not hurt to much. 

Jun 21, 2007 10:18 AM #45
Rainmaker
813,407
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Thanks for the advice George. I really appreciate it.

Jun 22, 2007 11:37 AM #46
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lanre, you are welcome.

I also responded to you e-mail, call me if you want to talk about the further. 

Jun 22, 2007 12:23 PM #47
Rainer
39,876
Rick Grand
nowhere - Eugene, OR
I guess we have to take the good with the bad. Oh well, it happens. Thank you for the input on the change. Where are you getting your information? I like to keep myself as updated as I can.
Jun 22, 2007 03:35 PM #48
Rainmaker
593,907
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Hey George,

I guess I was one of the lucky ones...I never take any loan on my own properties with PMI ,PMS LOL!

I have no prepayment penalties...nothing. My rate is adequete at this time but I have a very high credit score and have no problem getting the best deal also my equity line is -50 basis points for 25 yrs.

Jun 23, 2007 12:49 AM #49
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Neal, we would get along then because I refuse to do loans with PMS........LOL

Also a rate on your equity line of 50 basis points (one half of one percent) is one heck of a deal :)

Jun 23, 2007 02:10 AM #50
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert
Rick, the Vice President of our Secondary Department receives change notifications directly from Fannie Mae, Freddie Mac, and FHA and then passes it on to those who need to be informed of the changes (sales, underwriting, closing, etc.).  Most of the time it is passed down to us at our monthly meetings.
Jun 23, 2007 02:20 AM #51
Rainer
39,876
Rick Grand
nowhere - Eugene, OR
Well George, thank you for the response! I will have to add you to my favorite blogs. Our company is rather small and I work in a community of about 150k people or so. There really aren't any "large" corporate structured companies around here which is kind of a shame.
Jun 27, 2007 05:21 AM #52
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Rick, you are welcome.  If you need any other information just let me know.
Jun 27, 2007 05:54 AM #53
Rainer
100,192
Kaushik Sirkar
Call Realty, Inc. - Chandler, AZ
Wow, higher fees across the board and elimination of one of your programs.  Certainly not a good combination for borrowers...
Jun 27, 2007 07:44 PM #54
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Kaushik, I just hope that the changes that might follow are not worst than these.
Jun 28, 2007 01:48 AM #55
Rainer
133,400
Susan Trombley
Trombley Real Estate - Wake Forest, NC
Broker/Realtor, Raleigh, Cary, Wake Forest, Youngs

George,

What are the chances that the FHA will change also? 

Jun 30, 2007 06:03 AM #56
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Susan I have not heard of any FHA changes recently, and we stay on top of that because we do so many FHA Loans.  There are some anticipated changes that I wrote a blog about a couple of months ago "FHA Stepping Up as Subprime Steps Back" but they have not been implemented as of yet and no word on will they will happen.

Jun 30, 2007 08:44 AM #57
Rainer
75,626
Ann Guy
NA - Allentown, PA
The winds of change had most certainly arrived. Thanks for sharing the info with everyone.
Jul 06, 2007 04:45 AM #58
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Ann, "the winds of change"  I like that :)
Jul 06, 2007 05:59 AM #59
Rainmaker
298,347
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor
George, :)
Jul 12, 2007 03:31 PM #60
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