San Diego Housing Market News and Analysis
Good times are back
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Submitted by wallers on April 18, 2015 - 8:51pm
Let's see historical low interest rates for historical length of time. QE easing. Affordability at all time lows, and now loosening of credit to make these unaffordable homes affordable. hmmm
Article about credit unions doing more mortgage volume.
By offering loans that address their needs — zero down payments, no private mortgage-insurance premiums, plus the standard low down-payment menus of the Federal Housing Administration (3.5 percent minimum) and the Department of Veterans Affairs (zero minimum) loans.
After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer. The Mortgage Bankers Assn.'s latest credit availability index reported improvements in all four of its loan categories during January. The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers.
Among the initiatives: giant investor Fannie Mae's resumption of purchases of conventional mortgages with as little as 3% down. Freddie Mac, another major investor, is planning to begin similar 3% down loan purchases for mortgages closed on or after March 23.
And there is your "top" ladies and gentlemen! Sell sell sell.
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According to Mike Fratantoni, chief economist for the mortgage banker's group, "roughly 40% of investors" already have begun offering the Fannie 3% down program. The guidelines for the Freddie Mac program are in lenders' hands and there's likely to be a strong rollout for it as well.
Also contributing to better affordability: the Federal Housing Administration's reduction late last month of its costly upfront mortgage insurance premiums, a move that could expand eligibility for home purchases to thousands of buyers, according to industry estimates. Virtually all lenders who work with the FHA program began offering the lower mortgage insurance premiums when the reduction took effect in late January. The FHA insures loans with down payments as low as 3.5%.
Brad Blackwell, executive vice president of Wells Fargo Home Mortgage, the country's largest-volume mortgage originator, is certain about what's underway in the market: "Things are looking better for home buyers and refinancers" — not only in terms of underwriting requirements but in the cost of credit as well.
Wells Fargo has been "gradually opening up the credit box," Blackwell said, in part because of helpful policy clarifications and changes at Fannie Mae and Freddie Mac. Those changes give lenders greater confidence in lending to a broader spectrum of borrowers, including those who don't have high credit scores and ready cash for big down payments.
For example, he said, although the bank previously had a credit score minimum — 660 FICO on conventional loan applications — now it requires no hard and fast minimum. Instead, if Fannie Mae's and Freddie Mac's automated underwriting systems accept the application — say you've got a relatively low credit score but strong compensating factors such as solid income, ample reserves and a large-enough down payment — the bank won't say no to you solely because of the low score.
This could be especially important to people who had tough economic experiences during the recession that damaged their credit but who are now excellent candidates for a loan. On FHA applications, the bank will now accept FICO scores as low as 600, down from its previous 640 standard.
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