Fannie, Freddie and the Fed

  • The $25 Billion Mortgage Settlement Shake Up & The Other 50%

    Distressed home loan borrowers are set to receive some level of financial relief as the national mortgage settlement filed in February in federal court demanded $ 25 billion in compensation from the top five big and bad mortgage service banks; Bank of America, Ally Financial, JP Morgan Chase, Wells Fargo and Citibank. Each are required […]

  • Monthly Recap: Single Family Homes Sales Rise, The Fed Shows their Hand and FHA Gets Strict on Buyers

    The US Commerce Department reported that nationwide production of new single-family homes rose 4.4 percent in December 2011, a positive outlook as this is the third consecutive increase since April 2010. On a local level, single family home sales in Naples Florida increased 5 percent in 2011 (5,162 contracts) as compared to 2010 (4,896 contracts).The economic uncertainly has many speculating that the Federal Reserve will need to shake things up in order to get the economy moving again. Earlier this month it was announced that the Fed will disclose its members’ forecasts for key federal fund rates.As the Federal Reserve moves swiftly to create clarity in the marketplace and spur on the economy, the Federal Housing Administration (FHA) is enacting practices that may curb the ability for buyers to purchase homes. a new rule is to be enacted to “reduce the maximum allowable seller concession from its current level to one more in line with industry norms.”The law states that a seller may contribute 6 percent towards the buyer’s closing costs to include prepaid expenses, discount points and other financing items. FHA is looking to reduce seller concessions to 3 or 4 percent of closing costs, thereby placing the burden on the buyer to bring more money to the table.

  • Public & Private Mortgage Parts; Fed Bows Out and Bankers Swoop In

    The federal government has stuck to their guns to support the reduction of home mortgage loans that they are willing to purchase. Fannie Mae and Freddie Mac will step in to buy loans for a maximum figure of $ 417,000. The Naples-Marco Island area where limits were previously set at $ 531,250 and have been reduced to $ 448,500.With these revised limits the natural course of action may be to look at the new realm of jumbo financing that begins where……


    Fannie Mae has launched a special offer for buyers who purchase a Fannie Mae owned home. Purchasers will qualify for up to 3.5% in closing cost assistance provided they meet certain qualifications.This latest incentive is a win-win for both parties. Traditional buyers face a tough road obtaining financing as banks have clamped down on available loans. HomePath financing offers buyers an alternative mortgage source and, albeit, temporary closing cost incentive. Fannie Mae hopes that this incentive will persuade droves of buyers to purchase a Fannie Mae owned home, thereby reducing its growing inventory of properties.

    The temporary incentive will give traditional buyers an opportunity to take a hard look at Fannie Mae owned homes and possibly be swayed to purchase one given the allure of free cash. Regardless of the incentive; buyers who purchase homes now, with the intention of staying put for a few years, will do wonders for every micro market. Does Fannie Mae realize that it’s attempting to systematically stabilize prices throughout the nation? Whether you are a fan or foe of this government entity, you’ve got to give them credit for trying!

  • No Mumbo Jumbo, Big Ticket Loans Are Back

    The credit crisis annihilated the jumbo loan market. Banks simply stopped making loans available for “expensive” homes”. According to Inside Mortgage Finance Publications Inc, jumbo mortgage lending increased by 20% in the 2nd quarter of 2010 as compared to first quarter figures. Originating $18 billion in jumbo loans for the quarter is a healthy start though there is still room for improvement. Buyers seeking to purchase a vacation home or condo may find qualifying for a jumbo loan via a large bank to be difficult. Processing delays, rigid requirements and bureaucratic red tape is pushing borrowers to seek alternative resources. A mortgage specialist or local lender may be able to structure the loan in an efficient and timely manner. Regardless of the mortgage source, underwriting continues to be strict. Borrowers need to exhibit stellar credit profiles, provide detailed income and personal documentation, and must contribute at least 20% of their own funds toward the purchase of the property.The resurgence of jumbo loans is a step in the right direction.Borrowers that have been sitting on the sidelines, due in part to the lack of financing options, should view the revival of jumbo loans in combination with low interest rates as motivating factors.No one knows exactly when the scales will tip in favor of sellers over borrowers. Yet when purchasing power becomes fluid in all price brackets there is a tendency for the tide to change on the proverbial dime.