Great News!!
According to the May 26 Realty Times, Fannie May and Freddie Mac will be dropping their practice of 5% higher down payments in so called "declining" districts.
They will be going back to uniform minimums as of June 1st.
No matter where their property is located, all home owners whose application is approved and underwritten through the companies automated online system will qualify for the minimum 3% program. Those who will require manual underwriting may still qualify for the 5% down payment minimum.
According to a top Underwriting official, improvement to their automated system account for the quick policy change....But a good part of the attitude change may come from intense pressure by real estate, ethnic and consumer group leaders including our own NAR. This issue was also debated widely here on Active Rain.
It is still not smooth sailing...PMI companys such as MGIC are exhibiting a business as usual attitude....this in turn will minimize the effectiveness of the change
Here's hoping they too will see the light and we will have a true Redlining Reversal!
Concord New Hampshire Realtor
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Joan Mirantz - Joni is a Realtor® with Keeler Family Realtors, a locally owned, Customer Service oriented Firm.
Joan Publishes a monthly Newsletter "Food For Thought" under the pen name Realtor Sherpa.
(Joan also answers to Miz Maven and Miss Joni.)
Joan works in Buyer and Seller Representation with concentrations in the Merrimack Valley Area and towns surrounding Concord NH - the Capital City.
"I love what I do, and it shows in how I do it"
good information...Thanks this stuff is getting maor and more complicated
You got that right William..but this move sounds like they could smell "lawsuit" in the air!
Joan this looks like promising news. However, someone warned me that this is not the entire picture -- even though Freddie and Fannie have made some changes, the PMI companies are calling the shots and may override what Freddie and Fannie want to do. We will have to watch this closing. Maybe some of our mortgage gurus can shed some light on this.
So true Joan...but they all stepped in line when it was started..perhaps the reverse is possible!
Joan - the practice of redlining seems to be one of selective enforcement. Perhaps Fannie and Freddie weren't willing to perpetuate the scam anymore, so they took the sane route. The PMI companies are the ones that are really taking a beating on these foreclosures. When the 80/20s and 90/10s were popular (and written every day of the week!) they took on a huge amount of risk based on say-so. Now that they are actually having to pay out on a bunch of these policies they are the ones crying foul! Just think how many people have paid for YEARS into these PMI policies and there were minimal amounts of claims. Do you not think that the insurance companies weren't getting fat off that? I hope the PMI companies agree to cooperate - it would make life so much nicer.
Joni~
Thanks for the news...and it does sound good. I like the idea that there is a positive response to some pretty challenging lending situations....seems like the graphic has it right...This could be...
Pressure should be coming from the Federal Government as well. The absence of such pressure speaks volumes about political agendas.
Joan, I hope this works out well for people and provides some relief.
Carol...It is empowering to see that we are of the same mind when it comes to Insurance Companies...ALL insurance companies. Something that used to be a benefit...has become a curse!
Hi janeAnne...we can hope...now if all the other little components would follow suit!
Eric...I strongly suspect you are correct on that one!LOL Why worry about we mere citizens when the "kings" dirty linen is being aired in public!(along with the prince and the court jesters!)
We all hope that Carole...we deserve it dont you think!
Any experience with lenders and MI companies accepting the new guidelines.
Richard
It's probably too new for that Richard apparently it goes into effect on June 1st. I'm sure there will be feedback before then. The MI companies, so far, say they aren't going along. But I get the impression from the artilcle...there is a lot of pressure on this! face it...it was descrimination plain and simple!
Any news that isn't bad news is, well, good news! At least it's something to report that isn't a negative to buyers- they've had enough in the way of difficulty (the good ones) and just need to get out there and find a house.
Baby steps. Baby steps. At least they're going in the right direction.
Now, since Fannie Mae has been shown to be a thoroughtly corrupt institution, in my true paranoid form, I suspect that they would change the code in the DU to limit pre-approvals from that source.
Since DU is for loans under $417,000, I believe that FHA, if the buyer is eligible, is a better source for funding.
Joan, it's ironic that much of the discrimination we see comes from the very government that seeks to outlaw discrimination!
I agree laurie...positive news not hype is what we ned to be hearing right about now...and if the others follow suit this is definately good for Buyers and Sellers!
Hear,hear for baby steps Lenn...the article did not go into much depth time will tell if you are correct! You are not alone in your paranoia!
Hmmm, You noticed that Brian!
I tend to do most loans over 80% loan To Value (LTV) FHA so I don't really worry about PMI availability(yes, there are exceptions). That said I am dead set against the redlining that has been going on. IMHO, the MI companies need to wise up to this unfair practice before they do have to stand up and explain these practices in court!
So glad to hear this practice is going away! We didn't even have a provision in our contracts to deal with it!
Tina in Virginia
I can't believe they would have implemented a location penalty in the first place. I'm glad to see the wheels of change turning. Maybe slowly, but turning.
Rich...hopefully eventually they will follw suit. it seems like a situation of act bfore you think!
Tina...lets just hope it sticks!
Sandra...It does make for alittle more hope...we need it!