Latest Freddie News Strengthens FHA's stranglehold on the market!!!

Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606
Freddie Mac is doing all it can to make sure that FHA is the lender for 2009. While FHA in 2008 has had an act similar to a top tier Rocky movie, Fannie and Freddie seem to be fading like Apollo Creed.

Freddie is now getting rid of Accept Plus Findings. That's huge. It's basically elimating stated findings. Further, Freddie is allowing AUS or Automated Underwriting Findings with a DTI or Debt To Income of over 45%, but FREDDIE HAS STATED THAT IT WILL NOT BUY any loans with DTIs over 45%. Now there are a few modifications and exceptions, but basically the writing is on the wall. Freddie doesn't want to endure the same issues that the sister, FANNIE, has endured.

FHA already allows things that Freddie and Fannie don't.

Non-occupant Co-borrowers;

No true credit score requirement;

All of the downpayment can come in the form of a gift;

FHA loans are assumable;

Loan Limits for FHA have been greatly increased;

Appraisals have been relaxed so as to mirror the more forgiving guidelines of Fannie and Freddie.

FHA is an awesome program. Freddie is making it more attractive. If you want more information feel free to contact me.

As a by the way, in my hurried state, my friend Jeff Belonger, caught me being a little too harried. So as a point of elaboration: •1) Conventional Non Occupant Co=Borrowers are allowed, but it's required that the borrower have ratios that are 38/43 or better. No such borrower qualification exists for FHA loans;

•2) Credit score requirement....the 4155 says the fact that lack of credit is not sufficient reason to deny an applicant. Needless to say, those with scores need to minimally get through an AUS or Automated Underwriting System, but most lenders won't buy a loan under 580, 560 and almost universally under 540 despite AUS accept findings;

•3) On the gift info, I should have elaborated, 20% or more as a gift from a from a relative on a conforming loan will work as well....however, most people don't have that ability.

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Dean Moss
Dean's Team - Keller Williams Realty Partners Chicago IL - Chicago, IL
Dean's Team Chicago IL Real Estate Team

Larry -

This is good news!

During the Salad Days of a couple of years ago, as you know, many would shy away from FHA financing due to it's sometimes onerous appraisal requirements.  FHA is the new route of choice for those with dinged credit and little down payment now, however, and will provide the road out for many as the housing market rebounds - hopefully sooner rather than later.

If you're ever downtown, look me up, Larry!  We're in the Lincoln Square Neighborhood, on the North Side of Chicago.


Nov 14, 2008 01:18 AM #1
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

FHA is the ONLY way to go. The current $729,750 limit really is driving some purchasing decisions NOW before it goes down to $625,500.

Nov 14, 2008 01:19 AM #2
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Fha is like a super-ninja nowadays.  Hopefully FHA is managed well!!  :-) 

Nov 14, 2008 01:26 AM #3
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ


I've always been a big fan of FHA and its wouldn't bother me to see them set the standards for future mortgaging...but I still think we need Fannie and Freddie to straighten out their acts with sound lending guidelines to create a viable housing environment  for the future!!! Thanks,   Fran

Nov 14, 2008 01:35 AM #4
Rick Kellow
Cherry Creek Mortgage - West Bend, WI
FHA & Reverse Mortgage Expert

FHA is the life blood of our industry at this point... we have found it to be better than the old sub-prime

Nov 14, 2008 01:37 AM #5
Richard Sweum
1st Security Bank - Everett, WA
What took them soooooo long? Unfortunate impact is that housing prices will bottom out at 2002 levels...smaller demand pool at every price point based on qualification standards, unemployment figures, yada yada yada.
Nov 14, 2008 02:14 AM #6
Bob Bauer
Law Offices Of Lynn Ramey - Tampa, FL

No true credit score requirement???? Your killing me

Nov 14, 2008 04:23 AM #7
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Larry... I agree and have agreed for many years, that FHA is the best out there... even when you had to compare the 97% financing options between FHA and convnetional back 3 to 4 years ago.

jeff belonger

Nov 15, 2008 09:28 AM #8
James Wexler - Scottsdale, AZ

Larry B - great new!!

I had no idea. I know mortgage brokers say FHA is more work and thus they have stayed away. However,  FHA is providing an important niche in a market where it is near impossbile for all but the best borrowers to get loans.

Nov 15, 2008 05:11 PM #10
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Larry Bettag

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What to know how to buy if you're a bit credit challenged?
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