Once again kicking us while we are down, I have been told by one of my investors that Fannie and Freddie Mac will start to introduce "FICO Rate Price Adjusters" beginning the first of the year. What does this mean for you the Real Estate Professional and our clients? Well, if we can get a standard DU/LP approval, we can price the loan with the standard adjustments (i.e. LTV, DOC type, etc.) Well, even if you get a standard approval, Fannie/Freddie are going to require lenders to factor the borrowers FICO into the rate equation. So a borrower with a FICO of 650 will end up paying an additional rate increase regardless of the approval type. In short, higher rates that further drives down the home values and/or qualification amounts.
Also in the works? My Community (Fannie Mae) and Home Possible (Freddie Mac) will soon be rid of 6% seller concessions (although we might have all seen this coming...) It will be lowered to the standard 3% as with all conforming conventional loan products.
The Moral: The THREE C's holds true... Cash, Credit, and Collateral is needed more now than ever.
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