the wasserblawg

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 controls Appraisals 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 po...

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 product...

The FBI released it's annual report on mortgage fraud earlier this week. Virtually all law enforcement and industry statistics show an upswing in mortgage fraud activity. The Mortgage Bankers Association released the National Delinquency Survey last week, reporting that the increase in foreclosure rates between quarters has reached its highest point since 1972 (when the records were first kept). The increase in foreclosures on first time mortgages increased by 36% between the first quarter 2008 and first quarter 2009. Little wonder why lenders are scrutinizing loan applications with an even finer toothed comb. Nor should it come as any surprise that lending guidelines are getting even tighter than they already are. Fannie Mae recently announced several new underwriting / eligibility guidelines that will become effective September 1st. Some key changes all Chicago area home buyers (and their agents) need to know: Buyers wishing to purchase owner occupied 2 flats will need to mak...

A big hat-tip to Wells Fargo Mortgage Consultant Martha VanBendegom for sharing information with me, so that I can share it with you. Everyone knows that a Buyer and Seller set out the terms of their real estate deal by writing and signing a contract. All agreed terms get spelled out, including the sales price and the closing date. The parties set the closing date in the contract. It gets written in stone, so to speak, no? Well, more written in sand than stone. Sand on a shoreline smacked over and over again by pounding waves of mortgage rules and procedures. Waves that erode the shoreline of that contract, and that will all but wipe those closing dates clean off the beach. Regulations spawned by the Federal Housing and Economic Recovery Act of 2008 go into effect at the end of July. The new regulations, coupled with Fannie Mae & Freddie Macs recent implementation of the Home Valuation Code of Conduct are going to take that "false illusion" of a fixed, certain, closing d...

Stop me if you have heard this one before. FHA financing has become more prevalent in the market over the last two years as Fannie Mae and Freddie Mac tightened the reigns on low down payment condo loans. More and more condo deals (at least the ones I am seeing) are being financed by FHA backed loans - they are still guaranteeing loans for up to 97% of a purchase price. That may change soon in the wake of FHA's Mortgage Letter 09-19, issued earlier this week. Lending guidelines for condominiums are changing. again. Basically, FHA requires that both the borrower and the property must satisfy lending guidelines. Condo approvals come in three different flavors: The Condominium is already on HUD's approved list; The developer or association apply for an approval of the entire building/project (to get on that list) - a "blanket" approval; or, The specific unit is approved on an ad hoc basis - a "spot" approval. Spot approvals require certain specified requi...

While I may have my doubts about the proposed home buyer tax credit, I have no such doubt about Fannie Mae's latest pronouncement . On Friday, Fannie Mae announced that it is removing the "four property" cap it imposed on real estate investors last year and will now fund loans to " high-credit quality, bona fide investors " for the purchase of up to ten investment properties. The loan guidelines are reported as: 720 minimum credit score 75% maximum loan to value for purchases 70% maximum loan to value for refi's , including "cash-outs," to the limit ( ok , that assumes that you have that still much equity left in the property) Starting March 1, 2009 Ok , truth be told, the four building restriction was only announced last fall and went into effect in December, so it was only a thorn in our sides for what, five weeks? But it most certainly was a thorn in the side of many investors. Why did the government stick it? Lenders needed to try to stem...

Back in February, I posted about an IRELA conference I attended in which two mortgage appraisers described the current market conditions from their vantage. They both expressed concern that Mortgage Brokers were demanding that appraisers find the "right" value for properties in order to get mortgage loans approved, and were threatening to stop doing business with those appraisers who would not "play ball" On March 3, 2008, Fannie May, Freddie Mac, the NY Attorney General and the Office of Federal Housing Enterprise Oversight reached agreement to address this problem. Effective January 1, 2009 , mortgage brokers will no longer be able to order "Made as Instructed" appraisals (requests for appraisals that contain instructions for a report to match the purchase price, or that have real or implied th reats that continued business orders will only be made if the appraiser establishes a property's value "as instructed." After December 31, only ...

Dan Green , of Mobium Mortgage created this visual reference to explain what happened when mortgage lenders relaxed lending standards and then tightened them down borrowers began to default on too many loans. null