It's the first time in three years, but Fannie Mae's Q4 earnings are actually in the black. What's up with that? If you've purchased a home in 2009 or 2010 you know that a big reason is due to new lending guidelines which has given every Realtor, Originator and Processor ulcers. BUT, their conventional loan book of business is looking really strong with a weighted loan-to-value at 68% and a weighted overal credit score of 762.
It's a nice headline but the let's not forget about the $91.2 billion in taxpayer support Fannie's requested since placed into conservatorship in September 2008. (AKA: The Day That Lending as we knew it died. RIP)
With this news, we hear whispers of even strictor guidelines requiring higher down payments to hedge risk. As a Realtor working with lots of First Time Home Buyers and Move Up/Down Buyers, the last thing my clients need is to hear that they need to wait another year to buy and save another $20,000 to buy. Logic would tell us that limiting access to lower down payment loans for those who can easily afford the payment would be a huge bummer for the market, but the last several years indicates that logic has been a rarity.
A very interesting report was recently released from a Senior Analyist at the Federal Reserve Bank of Cleveland noting that "more people decide to become homeowners when the down-payment restrictions are eased then when rates are reduced. A 1% interest rate subsidy may create an additional 74,000 Home Buyers, but down-payment assistance of $3,200 could attract $541,000 new Home Buyers."
On my Radio Show, I coined 2010 as the year where Common Sense Was Not So Common. But, hey, its 2011...If this study is accurate, wouldn't logic tell us that this may be a better place to focus?
Rebecca Austin is the Broker/President of New Team Realty in Carlsbad California. With 12 years experience, her team specializes in North San Diego County home buyers, Short Sale and REO transactions. Visit her at www.NewTeamRealty.com .