Homes of huntsville; lender guidelines tightened

Fannie Mae changes program guidelines October 20, 2012!



Tired of change? We understand! However, we want to make you aware of any changes that could affect your business. There are two Conventional outlets: Fannie Mae & Freddie Mac. Fannie Mae has announced changes to their underwriting system (DU 9.0) over the weekend of October 20th. Most approvals will be similar to the ones that are in the current system, DU 8.3. There are some differences, which are:

Condos: Some of the highlights are reportedly, "Limited Review for Condominiums is going to be maxed at 80% (currently at 90%) What is a condo review? A Limited Review Process is intended to be used on "spot loan" basis, meaning lenders can originate loans that arise through the ordinary course of business.


Expanded Approval:The biggest change, in my opinion, is that Expanded Approvals (EA), with the exception of DU Refi Plus, will be retiring. Expanded Approvals use to be in levels of I, II, and III (1, 2, & 3). The number let the underwriter know what kind of expanded risk the file was. Unfortunately, these will be going away.

ARMs and Rate and Term Refinances:
The maximum LTV to be allowed for financing will be DECREASED on ARMS and Rate & Term Refinances. Currently you can finance up to 97%.

For example: Sales Price: $100,000, loan amount can be up to: $97,000 (with certain parameters, including credit score and debt to income.) They will be decreasing this to 90%! The new max loan amount in the same scenario will be: $90,000.

ARM- adjustable Rate Mortgage
Rate & Term Refinance: Just lowering the interest rate, not paying off any debt other than the mortgage. Rate & Term refinances were prevalent before DU Refi plus. Many Americans do not have loans owned by Freddie Mac & Fannie Mae, therefore they would HAVE to do a Rate & Term Refinance or go with a government program, if the criteria allowed.

Self Employed Borrowers: Most real estate agents are self employed borrowers! Fannie Mae's new release will require self employed borrowers to produce 2 years of 1040's (currently allows for 1 year.) Most investors currently require the 2 years anyway so...... maybe not that big of a change.

Basically, Fannie has tightened underwriting standards based on performance data.


INFO THAT HITS US WHERE WE LIVE... One of the key things remaining to be done to achieve a housing market recovery is a return to appreciating prices. Many observers feel prices have stabilized nationally and now we're seeing the first signs of some increases. A national real estate website reports the asking prices for homes for sale were up in August for the seventh month in a row. This put them UP 2.3% versus a year ago, the largest year-over-year gain since the housing downturn began.Excluding foreclosures, asking prices Huntsville AL MLS were UP 3.8% nationally for the year. This means they're rising at a faster rate than wages, so affordability is no longer on the increase. The price gains are broadly based, showing up in 68 of the 100 largest metros tracked. Many feel a big reason for the improved housing market is the reduced inventory of homes for sale. According to the National Association of Realtors (NAR), inventory fell nationally 23.8% from a year ago July, to 6.4 months.

huntsville houses We can assist you in finding area houses that will meet your needs and price range.You can search the entire Huntsville MLS for houses on your own without having to register.