By now you have probably heard about areas being designated as "decining markets" with respect to mortgage financing. Fannie Mae has determined that certain counties (or towns) in certain states (or the whole state) are considered declining markets.
FNMA automaticall reduced the maximum loan to value (LTV) on these loans by 5% and sometimes more depending on the program,
As a lender, we must make sure that if the appraiser designates, or the automated underwriting engine (DU) determines that subject property is in this are, that we follow the new guidelines and possible reduce the LTV accordingly. There may be other underwriting issues to contend with as well.
Unfortunately there is no master list being published by Fannie at this time, however some specific programs are actively listing these areas of concern.
Bottom line, make sure your lender is aware of the situation, and is able to detemine whether subject property is affected or not as early in the process as possible.
Fell free to ask me any questions about this ongoing and ever changing topic!
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