FANNIE MAE RELAXES INVESTOR REQUIREMENTS, INVESTORS CAN NOW GET UPTO 10 MORTGAGES

The signs are a changing. Instead of making it harder to get a loan, we are seeing just the opposite begin. One of the first steps happened last week. Previously, Fannie Mae had changed the rules for investors. They would not give a loan to anyone with 4 or more existing loans. That does not make sense, what is smart is to give loans to truly qualified individuals. That was the change last week. Now, an investor can have up to 10 loans with Fannie Mae! This is AWESOME! WE NEED the Investors back in the market. The previous rules forced most investors to pay cash, because they already had 4 or more loans.
Maybe this is why today's reading on Pending home sales here in the valley is 9,342. I have not seen Pending home sales here in metro Phoenix over 8,300 since 2005. Last week we sold over 1,400 homes. Again this level of home sales has not been seen for over 3 years!
Just my opinion...Jeff Cameron
Below is the press release from Fannie Mae:
In Announcement 09-02 Fannie Mae stated, “(We) are committed to providing financing opportunities for high-credit quality, bona fide investors. Experienced investors play a key role in the housing recovery and Fannie Mae’s continued support for investor borrowers is consistent with its mission to provide stability, liquidity, and affordability to the nation’s housing system. Fannie Mae is modifying out current policy to allow investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements.”

Please be aware, that many lenders have not yet made the announcement as to when they will begin to purchase these loans. This coupled with the possibility of additional tax credits to all home buyers in the Senate version of the Stimulus bill, however could mean big news to the real estate market.

Eligibility Requirements
Eligibility Requirements: If Borrower owns Five to Ten Financed Properties

If the Property is a Second Home or Investment Property 1-Unit
Purchase Max LTV/CLTV 75/75% Minimum Credit Score 720
Limited Cash-Out Refinance Max LTV/CLTV 70/70% Minimum Credit Score 720
Investment Property 2-4 Unit
Purchase and Limited Cash-Out Refinance Max LTV/CLTV 70/70% Minimum Credit Score 720

Underwriting and Delivery Requirements
● The borrower cannot have any history of bankruptcy or foreclosure within the past seven years.
● The borrower cannot have any delinquencies (30-day or greater) within the past 12 months on any mortgage loans.
● Rental income on the subject investment property must be fully documented according to the Fannie Mae Guidelines: Rental Income.
Rental income from other properties owned by the borrower must be supported by two years’ federal income tax returns. Any streamlined documentation requirements must be disregarded and full documentation MUST be obtained.
● The borrower must complete and sign Form 4506 Request for Copy of Tax Return or 4506-T Request for Transcript of Tax Return granting the lender permission to request copies of federal income tax returns directly from the IRS. The lender must obtain the IRS copies of the returns or the transcript and validate the accuracy of the tax returns provided by the borrower prior to the loan closing.
● The borrower must have reserves for the subject property and for other properties currently owned by the borrower (i.e., other financed second home and investment properties) in accordance with the guidelines discussed below
● DU Refi Plus loans are exempt from the new requirements.

New Reserve Requirements
Fannie Mae is implementing new reserve requirements that apply to all second home transactions and to investor and second home borrowers that own or have an interest in multiple financed properties. The amount of required reserves varies depending on whether the subject property is a second home or investment property, and on the number of other financed properties the borrower currently owns.

The reserve requirements are as follows:
When the borrower will own one to four financed properties (including the subject property) the reserve requirements are as follows:
● 2 months of reserves on the subject property if it is a second home
● 6 months of reserves on the subject property if it is an investment property, and 2 months of reserves on each other financed second home or investment property.
When the borrower will own five to ten financed properties (including the subject property) the reserve requirements are as follows:
● 2 months of reserves on the subject property if it is a second home
● 6 months of reserves on the subject property if it is an investment property, and 6 months of reserves on each other financed second home or investment property.

An investor can buy a home with 10% down!

Hi. I am a preferred lender for the Fannie Mae Bank Owned Properties!It sounds too good to be true - An investor can buy a home with 10% down! No mortgage insurance required! Only 3% down required for a primary residence, with no mortgage insurance! That is better than FHA and no appraisal is required!This special financing only applies to Fannie Mae REO Properties. To search eligible properties, visit:reosearch.fanniemae.com/reosearch/

Fannie Mae to Temporarily Halt Foreclosure Sales and Evictions

Fannie Mae has issued Lender Letter 04-08 announcing that it is halting all foreclosure sales on occupied single-family properties that are scheduled to occur from November 26, 2008 through January 9, 2009. This temporary halt also applies to eviction lockouts of occupied single-family properties.
These actions allow affected borrowers to retain their homes while Fannie Mae works with its regulator and conservator, the Federal Housing Finance Agency, to implement the previously announced streamlined loan modification program by December 15, 2008.
To facilitate borrower communications, servicers must instruct foreclosure attorneys to send letters to borrowers whose foreclosure sales are halted urging them to contact their servicer, so that together, the servicer and borrower can continue working to resolve the delinquency.
For complete details, including other servicing and reporting requirements, please see Fannie Mae Lender Letter 04-08 on our 2008 Lender Announcements and Letters page on eFannieMae.com and the news release on fanniemae.com

DPA, DOWN PAYMENT ASSISTANCE, SHOULD NOT GO AWAY

The DPA was eliminated effective October 1, 2008, in the comprehensive housing bill (H.R. 3221) due to political negotiations. It seems every time the government steps in to help during a crisis, political pressure creates a law that does more damage than good. They had to do something about Fannie Mae and Freddie Mac, but at the cost of down payment assistance program; was that wise?
I have copied part of a document that gives statistics on the DPA program. The truth is currently in Phoenix, 82% of homes sold are now FHA. Let me just tell you FHA disappeared during the boom run up of 2004 to 2006 due to low loan limits and high real estate prices, so they weren't the culprit of this BUST. Back to the facts, of those FHA loans 50% are DPA loans. What will happen when you remove 41% (82% X 50% = 41%) of the buyers from our market? It can't be pretty, that is our government helping out again.
Many in congress pointed to DPA as the reason for this bust. NO, the reason for the bust was GREED by people with money running up property values, bank fraud, unlicensed loan officers and the rest of the industry going along. Yes, I mean us Realtors too.
DPA does have a higher failure rate than regular FHA loans. But when 94% of the borrowers pay on time, is that a bad program. It creates home ownership and pride in the community. Home ownership is the only way for many people to build wealth and a nest egg for retirement. This again shows how the narrow minded LAWYERS we hire, through our votes, as representatives twist the truth for their own agenda. It is always about ME, ME, ME(or should I say, my special interest, my special interest...). That is why I switched to Independent. I see votes as GREED and MEED, not what is best for our country. That is why no one is doing anything about: Energy problem, Trade imbalance, Budget deficit, Medicare, Social Security and Education. Because we are still 15 to 20 years away from those becoming the next BUST for our country! Is the only answer hyper inflation to make these financial issues go away? Our political representatives seem to think so, because that is the only answer right now.

Don't get me going, Just my opinion.

Jeff Cameron



IMPACT OF THE CHARITABLE DPA PROGRAM ON FHA
The Mutual Mortgage Insurance Fund (MMIF) WILL NOT Require an Appropriation – The MMIF is the fund that supports FHA’s home mortgage program. A 2007 Congressionally mandated independent actuarial review of the fund shows that from 2007 to 2014 the MMIF will realize over $1 billion per year and be at three times the statutorily required 2% capital ratio even with a significant number of charitable DPA gift assisted loans. H.R.6694 will further enhance the fund by requiring higher FICO scores and increased premiums based on homebuyer qualification.
FHA Loans Using Charitable DPA Gifts Enjoy 94% Success Rate; Comparable To Other FHA Loans – 94% of charitable DPA-assisted homebuyers pay their mortgage without undue difficulty, according to a 2005 study by the General Accounting Office. Specifically, FHA homeowners using gifts from seller-based and other DPA assistance with 3-year old loans have a 6% and 5% default rate respectively while FHA owners using no DPA assistance have a 3-4% default rate. H.R.6694 will further enhance the success rate requiring higher FICO scores for homebuyers who need DPA assistance.
Loans Using Charitable DPA Gifts are 50% of FHA’s Current Annual Volume – The advent of the private sector’s subprime, zero downpayment mortgage market caused FHA’s overall mortgage market share (in dollar volume) to decline from 7.87% in 2001 to just 1.99% in 2007 (HUD Actuarial Review). Even though the number of DPA gift-assisted loans stayed about the same, the drastic decline in the overall number of FHA’s non-DPA loans means that DPA gift-assisted loans (from any source) now account for almost 50% of FHA’s total loan volume. Seller-assisted DPA’s portion of FHA’s current loan volume is 30%. The private sector sub-prime, zero downpayment market also siphoned off the less risky pool of FHA borrowers – leaving FHA with a larger than usual proportion of higher risk loans -- contributing to an increase in all of FHA’s claim rates. H.R.6694 will continue advancing FHA’s mission to serve low-to moderate-income homebuyers by reauthorizing and reforming DPA.
HOW THE CHARITABLE DPA PROGRAM WORKS WITH FHA DPA Program Is Specifically Designed to Meet FHA Borrower Needs – Charitable DPA programs aid borrowers who meet all the rigorous underwriting requirements with verified documentation to qualify for a FHA-insured loan but have insufficient capital to meet the three percent downpayment requirement for an FHA loan. Charitable DPAs bridge the gap by providing this downpayment as a gift to the buyer, helping those who otherwise could not become homeowners. The DPA
program was developed and designed to work with FHA’s specific mortgage requirements to expand homeownership opportunities to those who can qualify and sustain homeownership while also serving the population of homebuyers that is FHA’s mission to serve - minority, low-income, and working families with limited access to capital of whom 80% are first-time homebuyers.
read more on Ameridream: http://www.ameridream.org/Documents/Congress/Support-HR6694-TalkingPoints-8-21-2008.pdf

FANNIE MAE TO REDUCE DOWNPAYMENT REQUIREMENTS

Right on, a step in the right direction. I have been shocked that Fannie Mae and other banks have made is so much harder to qualify for a loan right now. They should have made is harder in 2005 and 2006, as the bubble grew. Take away demand and you avoid the imbalance. But they didn't.
It now seems that they intentionally push property values lower by making it harder to qualify for mortgages over the past year. Now that property values have dropped, the risk is much lower for new borrowers and the banks. Yeah, property values have dropped from 20 to 60% in the metro Phoenix area since the peak. So, now that prices are lower they are reacting by reducing the down payment requirement. This is great news. We need to continue to add demand to the market and this move will add demand. It is all about the balance of supply and demand. That is what controls everything, I mean everything.
Demand has been growing here in the valley. The 4 week moving average of valley home sales hit 1,220 last week, the highest since May of 2006. However, we still have over 45,000 single family homes listed for sale. With over 2,500 foreclosures last month, we know their is and will continue to be an abundant supply of homes. Every little bit we can do to add to demand will help us move towards a supply and demand balance more quickly.
Thank You Fannie Mae! What's next! How about the JUMBO market, that is our biggest problem here in Scottsdale.

Here is the article from the AP about Fannie Mae:
Fannie Mae reduces downpayment requirements
May. 16, 2008 09:13 AMAssociated Press
WASHINGTON - Fannie Mae is doing away with higher minimum down-payment requirements for borrowers in parts of the country where home prices are dropping.
The government-sponsored mortgage finance company said Friday it will require minimum down payments of between 3 percent and 5 percent for all loans that it guarantees. That replaces a December policy that required a higher minimum if the loan was for a home in a zip code with declining real estate prices.
Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market.
Fannie Mae and its smaller sibling, Freddie Mac, had been under intense pressure to relax lending policies that had been tightened in recent months as foreclosures and defaults skyrocketed.
Richard Gaylord, president of the National Association of Realtors, said in an April letter to Fannie Mae, that because the health of a housing market can differ widely - even in the same zip code - in a particular neighborhood can differ widely, neighborhoods with healthy housing markets are often stigmatized.
Gaylord applauded the decision on Friday. "These new policies will help stabilize the credit markets, which will help encourage buyers to come back into the housing market," he said in a statement.
A Freddie Mac spokesman said the McLean, Va.-based company earlier this month adjusted its policies to make 5 percent down payments available in declining markets. Rather than defining those markets by zip code, Freddie Mac allows appraisers to make that determination, he said.
The announcement comes as lawmakers near a bipartisan agreement on a housing bill that could bring stricter regulation for the two companies. Senators are considering tapping a fund drawn from Fannie and Freddie's profits to pay for a new foreclosure-prevention program.
Congress created Fannie and Freddie to pump money into the home-mortgage market by buying home loans from banks and other lenders and bundling them into securities for sale on Wall Street. Together they hold or guarantee about $5.1 trillion in home-mortgage debt.
Fannie Mae shares fell $80 cents, or 2.60 percent, to $29.45 in morning trading. Shares of Freddie Mac fell 70 cents, or 2.57 percent, to $26.57.