For the second time in less than 3 months, Fannie Mae announced changes to its mortgage guidelines.

In its official announcement, Fannie Mae details the updates, meant to reduce the mortgage firm’s overall risk.

The first major change is with respect to credit scoring. All Fannie Mae loans — whether underwritten electronically or manually — require a 620 credit score minimum. There are very few exceptions.

A second change relates to loans with private mortgage insurance. Homeowners whose loan-to-value exceeds 80 percent now have a choice:

1. Accept higher mortgage insurance premiums month-after-month
2. Accept a one-time fee paid at closing to compensate for higher risk

Both options pass higher costs to consumers.

Then, a third change relates to maximum debt-to-income ratio. As announced in a separate document, Fannie Mae will no longer approve expense ratios exceeding 45 percent except with very strong assets and credit to back it up. In no case can expense ratios exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and new risk-based pricing on “expanded level” approvals.

Fannie Mae implements its updates during the weekend of December 12.

Therefore, if you’re going to need (or want) a new mortgage later this year, consider moving up your timeframe to October or November. Once the guidelines change, getting approved for a mortgage is going to be tougher.

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Most borrowers will still have to come up with the FHA’s required 3.5 percent down payment, unless they work through a state or local housing agency or an approved nonprofit. Ten states have such programs in place, according to the National Council of State Housing Agencies.  – AP: By ALAN ZIBEL

At this time Eagle has no investors who will take this.  David feels that we need more time for the program to “evolve” as no one know who will monetize these funds.  Borrowers can not yet use this as down payment, they still need the 3.5% down, it  may let sellers off the hook for closing costs, but at this point no one knows.

When this is available to us, we certainly will let the world know, that includes YOU! – Eagle Funding.

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Thanks to Vision Victory Manifesto for the footage

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This is the TRUE meaning of Lipstick on a Pig!  It is sad how BIG Marketing dollars can convince millions that you have a great Knowledgeable staff.

Country Wide slung tons of high priced/rate loans, and consumers ate it up.  I always shake my head in disbelief when potential client tell me “I am going to go with Country Wide”.  I do bask in the joy when I meet clients who tell me “My Last Loan was with Country Wide and it was nothing like they promised”.

Layer that Lipstick on and
Caveat Emptor

And so over the weekend, nearly 10 months after the Bank of America deal closed, Countrywide Home Loans signs came down and Bank of America Home Loans signs appeared at the lender’s 215 storefront offices in California. It was the start of a rebranding of nearly 1,300 Countrywide mortgage offices nationwide. (read full story)

Image: http://www.flickr.com/photos/brent_nashville/240072751/

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• Bank of America lets go of Countrywide name (money.cnn.com)

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Loans closed in May will have first payment dates of July 2009.

If April was a harbinger of things to come for May, Homeowners and Homebuyers will be the proud recipients of stable LOW Historic Mortgage Rates (see chart).  The FED will continue its Agency Mortgage-Backed Securities Purchase Program, which is will temporarily keep rates low.  Once the Purchase Program wraps, “Hello Carter era Rates”!

From the current analysis of MBS charts coupled with GOV subsides look to see rates stay low until late fall. If you are planning on purchasing or refinancing, now is the time to “Get off the fence” as both can take anywhere between 20 – 60 days to close.

April 2009 Mortgage Rate Chart

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For active home buyers who have yet to find the “right home”, long-term flatness like this is terrific.  While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid.

For buyers under contract or homeowners looking to refinance, though, the market’s pattern is a little more rough.  Although rates are holding steady week-to-week, the day-to-day action is quite different.  Bond markets are volatile and rate swings of a quarter-percent in a day have been common.

How good of a rate you get depends on day on which you shop. This complicates the process of “locking a rate” and makes it very hard for people trying to time a market bottom.

This week, though, the market may finally make a run and break its range.

Aside from it being an unusually data-heavy week, the Federal Reserve meets Tuesday and Wednesday to discuss monetary policy.  The data combined with the Fedspeak may push the markets one way or the other towards economic optimism or pessimism for the latter half of 2009.

Lately, it’s been a combination of the two — a “cautious optimism” — and that’s a big reason why mortgage rates have held in a tight range for so long.

Understand, though, that when mortgage rates finally do move, they’re going to move in a big way.  So, if you’re among the crowd looking for lower rates, the best possible outcomes you can hope for this week are:

• Weak consumer confidence data (Tuesday, Friday)
• Weak consumer spending data (Thursday)
• Falling “cost of living” calculations (Thursday)
• Fed concerns about deflation and/or recession (Wednesday)

Any of these four events would likely temper hope for a quick economic revival, sending mortgage rates lower.  On the other hand, if confidence or spending is strong, or the Fed has no regard for deflation or recession, expect mortgage rates to rise.

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April 2009 Mortgage Rates

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This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

http://ftp.irs.gov/newsroom/article/0,,id=204672,00.html

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