Three Recent Developments in the Mortgage Industry

    This year is already shaping up to be interesting in terms of what’s happening in the local and national mortgage industry. Here are the new developments:

    Three Percent Down Payments: Good news! The Federal Housing Authority announced that Fannie Mae and Freddie Mac will now offer mortgages with down payments as low as three percent for first-time home buyers who meet certain criteria. The change is designed to entice millennials and low-to-moderate income buyers to become homeowners. As I have mentioned previously, the lack of young, first-time home buyers is crimping the local real estate market, so this is a welcome policy change.
    (Fannie Mae and Freddie Mac are “government-sponsored enterprises” (GSEs). This means that they are privately owned, but receive support from the Federal Government. The GSEs provide a secondary market in home mortgages, purchasing mortgages from the lenders who originate them.)

    Interest Rates Remain Low: Today, 30-year fixed rate mortgage rates are as low as 3.75%, and 15-year fixed rates are below 3 percent. The Mortgage Bankers Association expects the Fed to hold off on its first increase in the federal funds rate until mid-2015, so buyers should be well positioned into the 2nd quarter of 2015.

    New Appraisal Review System: After the economic crash exposed outright fraud in the way many homes were appraised, Fannie Mae worked to develop a system that would reduce inflated appraisals. Starting on January 26, their new “Uniform Collateral Data Portal” software runs up to 20 additional comps against those provided by an appraiser. If all the comps do not align, they will kick the appraisal back to the appraiser for an explanation. If you are going to sell a home this year, understand that this may slow down the mortgage approval process and could result in appraisals below market value – and it will affect the approval process for some buyers. A recent article in Housingwire, “Appraisers Worry New Fannie Mae Program Could Bust Deals”, says it all.
    If you would like to discuss these developments, or if we can help you with any of your real estate needs, don’t hesitate to call my office at (914) 234-4444 or e-mail mark@markboyland.com. We look forward to hearing from you.

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