I got this announcement in an email from a lender. =>Fannie Mae Guidelines It contains some good news and some bad news for marginal credit borrowers. These changes will take effect May 19th
Seems as though Fannie Mae may be getting a little more conservative on their approvals for the High Risk, High LTV/CLTV loans. What does that mean? Quite simply, some high risk loans will be getting approvals with 'Levels' attached. Which means that they will be paying .5% to 1.5% higher rates than a low risk client. I see this as prudent and very fair for the borrowers. These levels have always existed, so that is nothing new. But the higher risk stuff will be getting 'leveled' more often now.
Another announcement, and this is a biggie, is that they do not require collections be paid regardless of amounts. Remember the "collections allowed up to $5,000"? They will now allow unlimited collections that do not affect title. So, the guy who has a 6yr old chargeoff for $5,500 can get into a conforming loan without paying off his collection. Fannie Mae used to require all collection paid if they added up to over $5,000. The presence of collections will still go into the risk analysis of the loan.
I could speculate on why these changes are being made..... but it would only be a guess. Who knows what all goes into their risk analysis thinking. But I suspect that Fannie is learning what we knew all along. Some borrowers with old collections can still pay their kmortgages on time. And that an arbitrary $5K limit did not make sense. The net result is going to be a little higher rate for the 100% loans as a result of the Expanded Level Approval. And some folks with great recent credit may be able to get into conforming rates regardless of old collections.
Is your loan officer running EVERY FILE through Automated Underwriting? They should be..... because a lot of these people in subprime loans probably would have qualified for something better..... a Conforming Loan.
Tom BurrisDallasLoanGuy.com
Texas Home Loans
Thursday, May 3, 2007
Friday, March 23, 2007
How should Realtors respond to the recent tightening of Subprime Loan Programs?
How should Real Estate Agents respond to the recent tightening of Subprime loan programs?
We have seen the writing on the wall. Now, the hammer has dropped. Many subprime lenders tightening up their loan guidelines and 100% financing for subprime borrowers is getting harder to find.
How should Real Estate agents respond?
1. Align yourself with loan officers who have access to FHA/My Community loans.
2. Ask your lender if they have access to the 'Community Reinvestment' loans offered by the large banks.
3. Become the trusted advisor. If you have a client with credit challenges, help them get educated about credit. A good starting point would be having them preview my free e-book titled "About Credit'. http://www.dallasloanguy.com/docs/about_credit.pdf . Although this is just a start, it will give your clients a good foundation of knowledge to build upon.
4. Beware of the credit repair companies.... who are more interested in collecting fees for credit repair than they are in DOING credit repair.
5. Be mindful of where your referrals are coming from. You may want to reconsider how much of your marketing dollars go to the referral sources that send you subprime business.
6. Talk to your lender. Don't be caught off guard by tightening loan guidelines. Get the clients prequalified as early as possible.
The world is not coming to an end.... but there are going to be some clients who could qualify last year that will not be able to get a loan this year. Don't let this be an excuse for a lack of business..... arm yourself with the tools to weather the changes.
http://www.dallasloanguy.com/
http://www.dallasloanguy.com/contact.shtml <== Free Texas Home Loan Chat
We have seen the writing on the wall. Now, the hammer has dropped. Many subprime lenders tightening up their loan guidelines and 100% financing for subprime borrowers is getting harder to find.
How should Real Estate agents respond?
1. Align yourself with loan officers who have access to FHA/My Community loans.
2. Ask your lender if they have access to the 'Community Reinvestment' loans offered by the large banks.
3. Become the trusted advisor. If you have a client with credit challenges, help them get educated about credit. A good starting point would be having them preview my free e-book titled "About Credit'. http://www.dallasloanguy.com/docs/about_credit.pdf . Although this is just a start, it will give your clients a good foundation of knowledge to build upon.
4. Beware of the credit repair companies.... who are more interested in collecting fees for credit repair than they are in DOING credit repair.
5. Be mindful of where your referrals are coming from. You may want to reconsider how much of your marketing dollars go to the referral sources that send you subprime business.
6. Talk to your lender. Don't be caught off guard by tightening loan guidelines. Get the clients prequalified as early as possible.
The world is not coming to an end.... but there are going to be some clients who could qualify last year that will not be able to get a loan this year. Don't let this be an excuse for a lack of business..... arm yourself with the tools to weather the changes.
http://www.dallasloanguy.com/
http://www.dallasloanguy.com/contact.shtml <== Free Texas Home Loan Chat
Subprime Mortgage Loan Implosion
A lot has been said about the Subprime market implosion... What about the other programs?
http://lenderimplode.com/is tracking the 'who's still standing' amongst sub-prime lenders
The Alt-A market is feeling some of the same pressures.... Loan guidelines are changing daily..... so much so that it is hard to keep up with what can and cannot be done.
The good news is.... the 'Full-Doc' loans are ok... the people who can verify income and a little money in the bank have much less foreclosure rates.
But, the 'Stated-Income', 'Stated-Assets', 'No-Doc', ect loans are the ones that can no longer get 100% financing. It is even harder if the loan is for a non-owner occupied property. So, if you cannot verify income and assets, you should be able to get a hold of enough cash for 5% -10% down payment.
The market is changing.... people may have to downsize on their dream homes and put a little money down. But the market will come back some once the foreclosure rate comes back.
Tom Burris
Sr. Loan Officer
http://www.dallasloanguy.com/
http://www.dallasloanguy.com/contact.shtml <== Free Live Texas Home Loan Chat
http://lenderimplode.com/is tracking the 'who's still standing' amongst sub-prime lenders
The Alt-A market is feeling some of the same pressures.... Loan guidelines are changing daily..... so much so that it is hard to keep up with what can and cannot be done.
The good news is.... the 'Full-Doc' loans are ok... the people who can verify income and a little money in the bank have much less foreclosure rates.
But, the 'Stated-Income', 'Stated-Assets', 'No-Doc', ect loans are the ones that can no longer get 100% financing. It is even harder if the loan is for a non-owner occupied property. So, if you cannot verify income and assets, you should be able to get a hold of enough cash for 5% -10% down payment.
The market is changing.... people may have to downsize on their dream homes and put a little money down. But the market will come back some once the foreclosure rate comes back.
Tom Burris
Sr. Loan Officer
http://www.dallasloanguy.com/
http://www.dallasloanguy.com/contact.shtml <== Free Live Texas Home Loan Chat
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