The first day of spring is March 20. Not only will the Carlsbad flower fields be blooming but it's the red-letter day on the San Diego real estate calendar. Spring forward also means the kickoff to the traditionally rambunctious spring selling season—historically, the go-go time of year. It’s when more homes come on the market, more prospective buyers come out to see them, and more sales are launched than in any other season. As exciting as it is to welcome another spring, this year what happens three days later might well turn out to be just as noteworthy.
The 23rd could become a second red-letter day for Carlsbad home buyers and sellers in 2015. If all goes according to plan, it’s the day when Freddie Mac joins Fannie Mae in easing the down payment requirements mortgage lenders observe. This is part of a development that surfaced last fall when Carlsbad residents first noticed some trial balloon announcements from the mortgage lending industry. The source "insiders" who "leaked" details of an agreement being hammered out between Fannie Mae, Freddie Mac, and the lenders they underwrite. Both are huge players in the mortgage industry as Fannie buys mortgage loans from the large commercial lenders, Freddie, smaller houses. Both are regulated by the Federal Housing Finance Agency (FHFA). Freddie and Fannie lost a lot of it's goodwill as FHFA had to bail them out during the subprime fiasco (reality is it was we the taxpayers that bailed them out, not by choice either).
Last falls news leak indicated a reversal was in the wind. Borrowers with weaker credit might soon find it easier to land a mortgage, because Fannie and Freddie would resume making such loans less risky for lenders. That would be welcome news for San Diego area home buyers and sellers alike. Tight Carlsbad mortgage lending rules have been part of the national reaction to the subprime mortgage disaster, but the result caused a throttling back of the number of loans banks were willing to grant. Fewer mortgage loans meant that some sales simply wouldn’t take place irritating both buyers and sellers.
For some Carlsbad mortgage applicants, March 23rd’s kickoff date for a program Freddie Mac calls “Home Possible” could mark the resumption of renewed home owning possibilities. It also means that Fannie will be joined in offering “flexible credit terms and low down payment options”…options that can include down payments as low as 3%. Freddie’s website calls the result “more flexibility for maximum financing.”
With spring selling season upon us, “Home Possible” couldn’t have come at a better time (some in the home buying process had begun to think of Freddie’s previous programs as “Home Impossible”). The publicity alone should encourage some formerly gun-shy prospective Carlsbad mortgage applicants to resume their quest for a home to call their own.
If you could be one of them—or a homeowner preparing to list for the spring season—I hope you will give me a call. Your timing couldn’t be better!