These days, Fannie Mae and Freddie Mac are far from the two most popular kids in town. Groups on all sides of the political and ethnic spectrums have been criticizing them for designating entire geographic regions as declining, thus causing higher down payments for home buyers and little to no sales for home sellers. But [...]
These days, Fannie Mae and Freddie Mac are far from the two most popular kids in town. Groups on all sides of the political and ethnic spectrums have been criticizing them for designating entire geographic regions as declining, thus causing higher down payments for home buyers and little to no sales for home sellers. But it looks like Fannie and Freddie have been attempting to change that, since June 1 of last year.
At of the beginning of the month, Fannie and Freddie adjusted to the use of a uniform down payment nationwide, meaning each region will see the same rate regardless of whether it is declining or not. All applicants approved online will qualify for a 3 percent down payment program, and those who require manual approval will be applicable for a 5 percent plan. Mortgage payments continue to be determined by the borrower’s capacity and locale.
This is a definite move in the right direction for Fannie and Freddie, but it may be too little, too late. Private mortgage insurers will remain keenly aware of the areas previously marked as depressed and will refuse to touch those loans. Through the last year since this was put into place, the market has improved some, in different area’s, but not all. The hardest hit area’s still have problems with lenders accepting those loans.
So while Fannie and Freddie get an A for effort, they fail to help all area’s. The real estate world needs a nationwide plan everyone can agree to, so that currently dwindling markets have the opportunity to come back to life. After all, not every city is Austin. Not every city can succeed without the economy’s help. Sometimes, they need a little push.
In the last few years, new types of mortgages began to appear, such as the adjustable rate mortgage and the $0 down mortgage among them. Along with these changes, the restrictions became less enforced. Those who may have previously been unable to buy a home were now able to get approved. It seemed a great [...]
In the last few years, new types of mortgages began to appear, such as the adjustable rate mortgage and the $0 down mortgage among them. Along with these changes, the restrictions became less enforced. Those who may have previously been unable to buy a home were now able to get approved. It seemed a great way to move people toward “The American Dream” faster than ever before. Unfortunately, it was this practice that played such a large part in today’s mortgage crisis. It became clear too late that those who received a mortgage based on new, looser restrictions could not afford them.
Over the past year, lenders have been making up for past mistakes by once again making it harder to receive a mortgage. On top of that, many mortgage insurers, who cover the lender in case of default, have also tightened up their standards. Restricted areas of the country require a higher down payment and a higher credit score to insure a mortgage, and more cities are added all the time. Another more recent change is the inclusion of all paperwork to even be considered for a loan. In the near past, many homeowners were able to receive a loan or have a refinance without showing documentation of income or job history. Today, don’t bother walking in the door without the most recent W-2s and proof of employment. With America’s lenders getting back on track, less people will be approved for home loans. Fortunately, when all standards are met and paperwork ready, they will know it is something they can afford.
