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Showing posts from September 19, 2009

FHA LOAN STANDARDS GETTING TOUGHER

At the same time that conventional lenders are starting to show interest in the Chicago condo market, FHA seems to be pulling back a little bit.

On Friday, FHA announced plans that will tighten many lending standards, some outline below. This action is thought to be a pre-emptive effort as FHA will soon notify Congress that its capital reserve ration is dropping below 2% - the minimum threshold mandated in the legislature.

Under the announced changes:
Refinance loans will require tighter income & asset verifications and quality controlsAppraisals will be required whenever a borrower wants to add closing costs to the transaction.Mortgage brokers will be prohibited from ordering appraisals, but will not be required to use appraisal management companies. (changes here are consistent with the Home Valuation Code of Conduct, or HVCC).Appraisal reports will only be valid for 4 months, down from 6.There are a couple of less restrictive changes proposed too: Appraisals will be portable (a bo…

NEW HOPE FOR THE CHICAGO CONDO MARKET

Some mortgage lenders are dipping their toes back into the Chicago condo market, a development that could re-ignite local sale transactions. In recent weeks, I have learned of at least two different programs targeting area home buyers who do not want to make large down payment.

Mark Johnson at US Bank is offering a 97% LTV program. Vassili Sakkas at Wells Fargo recently turned me on to his company's new 95% loan products.

Yes, you read that right. At least two lenders are offering conventional, low down payment loans to Chicago are home buyers.

Chicago are condo buyers (and sellers) have faced a pretty tough challenge of late. The only game in town have been FHA guaranteed loans. The underwriting has been tough. Not all condominium buildings qualify for loans, let alone buyers.

The return of conventional lending alternatives should re-engergize the market. At least it will offer Buyers some new choices.

Please let me know if you hear of other lenders offering comparable products.