This will indeed suck for everyone! Be ready because it's coming, Fannie and Freddie are implementing this so, in order for the lenders to make these loans saleable, they will have to utilize these add ons.
FannieMae and FreddieMac have recently issued changes to loan level pricing adjustments that will take effect for loans purchased in early in 2008, however our Investors for new locks will need to implement these changes well in advance of the FNMA/FHLMC purchase dates.
These pricing changes are for Conforming Loan Programs with the following terms only:
Pricing adjustments will apply to loans with terms of 20 years, 25 years and 30 years with LTV's of 70.01% and above, with certain "representative" credit scores, as follows:
Credit Scores below 620 2.00 point charge
Credit Scores from 620-639 1.75 point charge
Credit Scores from 640-659 1.25 point charge
Credit Scores from 660-679 0.75 point charge
This isn't specific to any one lender, its new FNMA/FHLMC guidelines. For our bank personally, Citimortgage has already implemented these pricing changes.
Lock your people and get the pre-qualified buyers off the fence! This can be eaten in pricing but, it'll drive rates up for eveyone!
BTW, This makes FHA just a stronger avenue!