Over the last few weeks and months, the mortgage industry has experienced significant changes. Guidelines have changed, MI companies have tightened their belts, FHA has posted price adjustments to their upfront and annual MI premiums based on LTV and credit score, and Fannie Mae/Freddie Mac have loan level price adjustments for credit score and LTV. I jokingly say (but there's a legitimate amount of truth to my comments) that we're working 3 times as hard to close the same amount of loans as we did 2 years ago. The sub-prime market is gone (thank goodness) and the 100% financing that was available thru conventional means no longer exists. Thankfully, we've been FHA approved for more than 8 years.
So, the cheese has moved. Over the last few months, I've been researching other mortgage programs to bridge the gap and have found a solution. There is a government program for low to moderate income families that offers 100% financing in select areas. THIS IS NOT A BOND PROGRAM. THIS IS NOT A DOWN PAYMENT ASSISTANCE PROGRAM. THERE ARE NO ADDITIONAL COSTS TO THE SELLER. This is a straight 100% financing with no mortgage insurance. The seller can pay up to 6% of the sales price towards closing costs and pre-paids. And if the property appraises for more than the sales price, then we can finance the closing costs into the mortgage. Side by side, it is almost always better for the buyer and seller than an FHA loan. It really is an incredible product for the right buyer.
My office and I have spent more than 2 weeks calling listing agents to let them know that their property is eligible for this program and would you believe - THE LISTING AGENTS DON'T WANT TO TALK TO US ABOUT THE PROGRAM! This is not true in all cases, some have allowed us the 10 minutes requested to share some of the details of the program, but the majority seem disinterested. It absolutely amazes me!
So, real estate community, what do I need to do? Here are my thoughts:
1. Keep doing what we're doing with the phone calls to listing agents.
2. Direct mail to the seller and let the seller know that their property is eligible for 100% financing and see if I can put a bandit sign in the yard.
3. Advertise and hold a seminar for realtors and educate those that attend about the product
I'm open to any other ideas that might help bring this product to the market. Because the industry has changed, I'm prepared to do whatever is necessary to continue offering mortgage financing to qualified buyers. I look forward to your feedback.