In my recent newsletter, I wrote about the proposed shoring up of FMAC and FNMA (Freddie Mac and Fannie Mae) by politicians in Washington. These are basicaly the two agencies that insure home loans. This “shoring up” process will start this coming September 30thwith a measure that will result in borrowers being required to pay increased interest rates for loans over $625k.
The issue that's getting the most attention in the news, though, is the Qualified Residential Mortgage (QRM) proposal that will require a 20% minimum down payment on ALL real estate purchases. Of course, there will be exceptions, but they're few and far between. These situations would not be affected by the proposed rule:
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FHA loans 3.5% down
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VA loans could still be 0% down
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Portfolio loans originated and held by lender
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Fannie Mae and Freddie Mac loans 5% down
Keep in mind that even the above exceptions will have exceptions, as evidenced in the above reference to Freddie Mac and Fannie Mae borrowers having to pay increased interest rates for loans over $625k as of September 30th. This is because the qualifying loan threshold is being lowered by over $75k.
Only one in five first time homebuyers can put 20% down on a new home, and this new ruling would require lenders to keep 5% of the value of non-qualifying mortgages on reserve (i.e. 5% of the down payment). The more contingencies, the less attractive a loan situation is to any prospective lender.
The bottom line: There are more hoops than ever to jump through to get a home loan and, once you get that home loan, there is now a strong move in Congress to remove the home interest deduction from income tax calculation...which is one of THE major benefits of owning a home.
Doesn't the real problem lie in the trust home buyers put in the financial institutions that brokered the home loans based on inflated home values? Instead of punishing buyers for their trust, why not put the focus on the monitoring and proper management of the financial institutions and the appraisers?
Let your voice be heard and contact your Congressional representative. Urge them to resist these measures that will ultimately erode home values and destroy your hard-earned wealth. For help contacting your local congressman and senators, click here:www.congressmerge.com/onlinedb
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