NAR Seeks Moratorium on Appraisal Rules

The National Association REALTORS® and the National Association of Mortgage Brokers are pushing hard to delay implementation of the new Fannie Mae and Freddie Mac rules governing real estate appraisals.The new rules are supposed to take effect May 1, but the REALTORS®, in a letter to the Federal Housing Finance Agency, argued that there hasn’t been enough time to properly implement the changes and the result would be higher costs for borrowers. They seek a one-year moratorium.The goal of the change is to eliminate alleged collusion between mortgage lenders and appraisers to pump up home values. Among other things, the rule change prevents mortgage brokers from ordering appraisals directly, requiring them to go through lenders. Mortgage brokers say this will make it hard for them to compete with lenders. Borrowers shopping for the best rate could be asked to pay for multiple appraisals, says Michael Carrier, an associate with the Mortgage Bankers Association.Read the NAR's letters to Fannie Mae and Freddie Mac on the issue. Source: The Wall Street Journal, Jessica Holzer (04/29/2009)

Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas ("high-balance" loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.

The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:

—Loan must be conventional, first-lien mortgages only.

—One to four unit properties are eligible.

—Loans must be fixed-rate or adjustable rate loans (no balloons).

—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.

Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised
www.freddiemac.com
Eligibility Requirements for High-Balance Mortgage Loans

Small Scale Investing Challenge

Investor Report: Small Scale Investing Challenge
by Kenneth R. Harney

Small-scale investors who own condo units are facing tougher financing challenges as the biggest players in the market are imposing new restrictions -- worse, it seems, every month.

Fannie Mae and private mortgage insurers don't say it this way officially, but their actions make it clear: They don't want to finance condos in large numbers any more, and they are making it increasingly difficult for developers, unit owners and potential investors.

That wouldn't be a big a deal if Fannie were not the number one traditional source of financing for condominium units. Freddie Mac, its smaller rival, has been far less active as a buyer or guarantor of condo loans.

Fannie's latest moves, which took effect March first, ban mortgages in new condo developments where fewer than 70 percent of the units have been pre-sold. The previous cutoff point was 51 percent.

Also Fannie no longer will finance units in projects where more than 15 percent of unit owners are behind on their payment of condo dues, or where more than 10 percent of the units are owned by a single investor, individual or company.

On top of that, Fannie now declines to finance units in buildings where more than 49 percent of all units are owned by investors. Forget most resort area rental condos. Forget condo hotels.

Private mortgage insurers have joined the condo-avoidance bandwagon by either refusing to insure low-downpayment loans in any of dozens of local markets deemed to be "declining," or by charging exorbitant premiums on units in healthier markets.

Even Freddie Mac may soon be following Fannie in restricting condos sharply. It recently raised the minimum downpayment on condo unit loans to 25 percent, and added a three quarter point penalty on top of its regular fees for condos. Fannie also hits all condos with a three quarter point add on.

Fannie Mae now reserves the right to REJECT financing on condo units in projects where -- in its sole opinion -- developers or sellers are offering "excessive" come-ons to buyers, either on below-market financing or other subsidies designed to get buyers to sign contracts.

Fannie says such concessions distort the true market values of the condo units in the entire project.

One glimmer of possibly good news here: Fannie Mae says it is willing to review individual loan on a case by case basis in situations where condo projects don't quite make the grade --- for example, there are more investor units in the building than normally permitted, but lenders will need to submit documentation that the overall project is healthy economically and presents minimal risk.

Feds launch 'Home Affordable' site

Borrowers can check eligibility for a loan mod, refi

By Inman News, Friday, March 20, 2009.

A new government Web site includes online tools that can help troubled borrowers determine whether they are eligible to participate in the "Making Home Affordable" loan modification and refinancing program.

The site, MakingHomeAffordable.gov, is intended to help communicate how the program works and who is eligible -- elements "critical to the program's success," Housing Secretary Shaun Donovan said in a press release.

The Making Home Affordable program includes $75 billion in incentives for loan servicers and borrowers intended to help up to 4 million homeowners negotiate loan modifications or short sales with their loan servicers. The refinance component of the program will rely on Fannie Mae and Freddie Mac to refinance up to 5 million loans they already own or guarantee (see story).

Fannie Mae and Freddie Mac have set up Web sites and toll-free hotlines to help borrowers determine whether their existing loan is owned or guaranteed by Fannie or Freddie.

The Fannie Mae form is at www.fanniemae.com/homeaffordable, and the company is accepting calls at (800) 732-6643. Freddie Mac's Web site for troubled borrowers is www.freddiemac.com/avoidforeclosure and calls are accepted at (800) 373-3343.

Borrowers can also apply for help from their mortgage servicer by submitting details about their financial situation using an online application form at HopeNow.com, the Web site operated by an alliance of mortgage servicers and nonprofit counselors, or by calling the HOPE NOW hotline, (888) 995-4673.