Danny Salas

Appraiser Independence Requirements

Replacing Home Valuation Code of Conduct Code

On or around October 21, 2010  Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae will will have created and executed new appraiser independence requirements to follow the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).  Until the change is released in the upcoming Selling Guide announcement, existing  provisions of the HVCC will still apply.

The Change

The revised requirements will continue to help us ensure that the highest standard of appraisal reliability and appraiser independence are retained. It will also maintain the spirit and intent of HVCC, and continue to provide important protections for mortgage investors, home buyers, and the housing market.

During this process, Freddie Mac has been recieving information and other valuable input from key industry participants.

For more information, visit the Home Valuation Code of Conduct Web pages on FreddieMac.com.

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Tighter Guideline Announcements From Fannie Mae

Harder To Qualify

Fannie Mae announced that it will tighten lending requirements for its interest-only loans (I.O.)and adjustable rate mortgages (ARM).  If a borrower wants an Interest Only mortgage through Fannie Mae, for example, he or she will have to make down payments of 30% of the sale price. For Adjustable Rate Mortgage’s, Fannie Mae will only buy those underwritten to ensure that borrowers could still afford payments even if their interest rates reset to the higher of either; 1) the loan’s initial interest rate plus two percentage points or, 2) the maximum the interest rate the loan can rise to, known in the industry as the cap rate.

Examples:

As an example, for a loan with a beginning rate of 5% and a cap rate of 9% borrowers would have to demonstrate they could still keep up payments even if the rate rose to 9%.   For an ARM with a fixed period (for example 5 years) any initial period with 5 years or less qualify at greater of note rate +2% or fully indexed rate, and I.O. loans will have a maximum LTV 70% and a minimum FICO of 720 with 24 months minimum reserves.

Bye-Bye Balloons

Loans With Balloon Payments

Balloon Loans, unless they receive special approval, are going away entirely with Fannie Mae. Fannie Mae is giving the industry some lead time:  All loans not meeting the new guidelines must be purchased as whole loans on or before August 31, 2010.

For More Info.

Fannie Mae’s News Release

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Fannie Mae To Update Their Automated Engines This Weekend

RefiPlus & Home Affordable Refinance

Fannie Mae’s Automated Engines, Desktop Underwriter (DU) and Desktop Originator (DO),  will update to their latest version 8.0, the weekend of April 17, 2010.

The update will be implementing changes to certain criteria that will be required before selling the loan to Fannie Mae, as opposed to warnings or red flags  regarding items to simply just be aware of.

This update will not effect the purchase market too extensively.  Updates to RefiPlus and the new Home Affordable Refinance loans, are the primary reason behind this update.

Chico, CA Interest Rates Market Report – Economic Influences – March 23, 2010

YOU DON’T WANT TO MISS THIS EVENT!!!Scott St. John will be speaking at The Big Room At Sierra Nevada The , Friday, March 26, 2010.  Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to more timely and difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers.  $15.00 AT THE DOOR!

A Hint On Locking Advice

We managed to climb above the 100-Day Moving Average, yesterday.  This is a huge pyschological step, as the 100-Day has been acting as a layer of resistance for quite some time.  If we can manage to stay above this level, it would make sence to float long escrows, and not lock for longer periods of time, as it would save clients a lot of money. 

Housing Numbers

5.02 Million Units were sold in the Existing Home Sales Category.  That was just in line with where we expected to be, however, the grimmer figures were the exiting inventory numbers.  These spiked to an 8.6 Month level.  Higher than the 7.8 Months reported last month, and close the the 9.2 Months reported last August.  Perhaps the Tax Credit, coming to an end, will help stave off these numbers for March and April.  We’ll have to see. 

Fannie Mae and Freddie Mac’s Future? 

Treasury Secretary Timothy Geithner is speaking to the House of Representatives Financial Services Committee, today.  He’s discussing the reason behind the government take-over of Fannie Mae and Freddie Mac.  He’s expected to comment that had the government not taken over these entities and pumped $127 Billion into the groups, the housing industry would have CRASHED…harder than it already has.  Republicans are looking to privatize the GSE’s, as soon as possible.  While this would be healthy for competition, of course, their idea is that the government can spend too much and not run the entities appropriately.  However, keep in mind…that’s just how we got into this mess, in the first place.  So, a slow transition, is what I believe would be more beneficial to the American People.  Keep in mind…these GSE’s are simply in receivorship, and will be released back to a private status once they’re more healthy.  “AFter reform, the GSE’s will not exist in the same format as the did in the past,” Geithner said.  “Private gains will no longer be subsidized by public losses, capital and underwriting standards will be appropriate, consumer protection will be strengthened, and exxcessive risk-taking will be restrained,”  he pledged.  The public will have an opportunity to comment on these suggestions by April 15, 2010. 

We Are Continuing To Float Into The Day

Locking Advice

As mentioned above…we may as well float, until we see signs that we’ve going to move under the 100-Day Moving Average. 

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