Freddie Mac and Fannie Mae Change Lending Policy, Posted by Charles
We have good news to report on Freddie Mac and Fannie Mae’s declining market policies that have been hurting homebuyers in recent months. A bulletin issued by Freddie Mac on May 2 gives lenders new guidelines on how to deal with borrowers in a declining market. Earlier in March, Fannie amended its declining markets policy and reminded lenders to make their own judgment on local market conditions.
I am especially encouraged by this news because just last week I spoke with representatives from Fannie and Freddie and urged them to make it clear that lenders should not be afraid to counter an initial assessment that a home is in a declining market. The changes by Freddie and earlier made by Fannie will make lending easier to borrowers with good credit.
Under Freddie’s new policy, mortgages with maximum Loan to Value equal to or more than 95 percent are not required to reduce the maximum Loan to Value ratio below 95 percent. First, the mortgage must be used to purchase a home or for a “no cash out” refinance. Second, the mortgage must be secured by a one unit residence. Also, the mortgage application must receive a “accept risk class” approval from Freddie’s automated underwriting software. This is good news for the market.
We hope that these policies will bring stability to the market and new qualified buyers to the table. NAR is pleased to bridge the gap between the mortgage lending community and Fannie and Freddie. We hope buyers can benefit and the spring buying season catches on in many markets around the country. -- Charles McMillan, 2008 President-Elect
Subscribe to this blog's Web feed
Comments
Yes, this is all good for those of the consumer market with "good" credit, which is limited. What will be done to those with bad and not so good credit? May I be the reminding voice in stating that that market, in and of itself, is not the reason for this downfall of housing, but rather, the greed of the past of the banks and now the restrictive fear based hold-all-of-the-money-close-to its chest officers of the bank and federal policy players!! What will be done to ensure that all segments of the market --good, not so good, bad and awful credit named consumers -- are fairly able to obtain mortgages?
Taylor Harrington
Posted by: Taylor Y. Harrington | July 14, 2008 12:45 PM