FHFA Raises Conforming Home Loan Limits

The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.  “El Dorado County, CA.” will be $517,500.

For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.

The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price.

Source: Federal Housing Finance Agency

FHFA: Loan Limits Mostly the Same for 2016

The Federal Housing Finance Agency announced that maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will remain unchanged in 2016 for most of the country. Fannie and Freddie loan limits will remain at $417,000 for single-family homes in 2016, however, in 39 counties deemed “high cost,” the FHFA says that the conforming loan limits will rise next year.

FHFA says most cities will not see the change in loan limits because the agency determined that the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.

View this chart from HousingWire to see the 2016 loan limits for the 39 counties that will be posting increases next year.

Source: “FHFA Announces 2016 Conforming Loan Limits,” HousingWire (Nov. 25, 2015)

Foreclosure Aid Programs ‘Extended to 2016’

The Federal Housing Finance Agency announced that it would be extending its participation in the Home Affordable Mortgage Program and the Home Affordable Refinance Program through the end of 2016.

“These programs have provided critically important relief for many borrowers by allowing them to lower their monthly payments and, as a result, have prevented many foreclosures,” says Mel Watts, FHFA director, regulator of Fannie Mae and Freddie Mac.

Under HARP, home owners who have loans backed by Fannie Mae or Freddie Mac can refinance at lower interest rates, even if their home has lost value. HAMP, on the other hand, provides incentives for lenders to alter mortgage terms of borrowers in order to make the loans more affordable.

HAMP and HARP were started after the housing crisis to help home owners avoid foreclosure. While the number is lessening, Watt estimates that about 600,000 borrowers could still be helped by HARP.

Source: “Fannie, Freddie Participation in Foreclosure Prevention Programs Extended,” Reuters (May 8, 2015)

Mortgage Giants Urged to Ease Up on Credit-Scores

The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to explore “alternate” credit-score models and the credit history of the loans they back. The move is part of several efforts by FHFA to ease tight mortgage standards and help more potential buyers qualify for financing.

FHFA Director Mel Watt has said expanding credit access is an important goal in 2015, but it needs to be balanced against the risk of loan losses. FHFA is the regulator of Fannie Mae and Freddie Mac; the two companies, which were brought under government conservatorship in 2008, purchase more than half of the new mortgages in the U.S. and then package them into securities.

Qualifying for financing has been a big hurdle that has sidelined many potential buyers from the housing market in recent years. REALTORS® continue to cite their clients’ financing struggles in qualifying for a mortgage as one of the top causes of derailing transactions, according to the latest REALTOR® Confidence Index, reflecting responses of more than 1,800 REALTORS® about their transactions in November.

At the end of 2014, FHFA made moves to expand credit availability, including offering loans through Fannie and Freddie that require down payments as low as 3 percent. FHFA also has ordered the GSEs to begin paying into the affordable housing fund, allocating millions of dollars a year to allow states and other government agencies to build low-income rental housing or rehab existing housing in an effort to increase affordability.

Source: “Fannie, Freddie Must Study ‘Alternate’ Credit Scoring: Regulator,” Reuters (Jan. 14, 2015) and “Fannie and Freddie Directed to Aid Underserved Borrowers in 2015,” Bloomberg (Jan. 14, 2015)

FHFA’s Dramatic Easing of Mortgage Standards

Federal Housing Finance Agency Director Mel Watt said FHFA will release guidelines “in the coming weeks” to allow increased lending to borrowers with down payments as low as 3 percent. FHFA, which regulates Fannie Mae and Freddie Mac, also will help lenders who sell loans to the mortgage giants by easing standards on borrowers who don’t have perfect credit profiles. The move is expected to help open up the credit box to first-time buyers, self-employed borrowers, borrowers who have had recent job switches, and borrowers who faced financial hardship during the recession.

FHFA said it will clarify to lenders when it will force buy-back loans that were issued based on inaccurate information. FHFA acknowledges that it failed to provide lenders with enough clarity in the past. That caused lenders to get cautious with lending after facing a flood of high-dollar settlements from loans they issued that later turned sour.

“We know that this issue has contributed to lenders imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations,” Watt said. Addressing such issues are “critical to ensuring that there is liquidity in the housing-finance market and to providing access to credit for borrowers.”

Source: “Regulator Unveils Plan to Spur Lending by Fannie, Freddie,” Los Angeles Times (Oct. 20, 2014) and “Fannie-Freddie Clarify Buyback Rules in Bid to Ease Credit,” Bloomberg (Oct. 20, 2014)

Home Affordable Refinance Program is ‘Not a Scam’

About 800,000 families across the country could benefit from the Home Affordable Refinance Program by lowering their monthly mortgage payments, but fear is keeping them away from the program, said Mel Watt, director of Federal Housing Finance Agency, in remarks at a public campaign in Atlanta this week to promote HARP.

“HARP is designed to reward those borrowers who are the most committed in this country,” Watt said. “This is not a scam.”

The FHFA estimates that eligible borrowers could save nearly $2,300 per year on their mortgage payments with HARP. But Watt said too many borrowers are still not taking advantage of the program.

“As it stands now, people don’t trust their lenders, and it’s creating uncertainty,” Watt told HousingWire. “We know that there are hundreds of thousands of borrowers who can still benefit from the Home Affordable Refinance Program and are essentially leaving money on the table by not taking advantage of the program.”

FHFA released a new interactive map that reveals the number of estimated borrowers who are eligible for HARP across the country. Borrowers in Florida, Michigan, Ohio, Illinois, Georgia, and California have some of the largest number of borrowers eligible.

Source: “Watch: FHFA Director Watt Ensures HARP Is ‘Not a Scam,’” HousingWire (Aug. 25, 2014)

 

Fannie, Freddie ‘Fee Hikes Delayed’ for Review

The incoming director of the Federal Housing Finance Agency says that he will delay Fannie Mae and Freddie Mac’s planned increases on mortgage fees until he has time to review the reasoning behind it.

The move by Mel Watt, D-N.C., who was confirmed by the Senate earlier this month, comes after FHFA’s current acting director Edward J. DeMarco announced the hikes.

Fannie Mae and Freddie Mac said earlier they intend to charge more to lenders who guarantee loans for borrowers with mid-range-or-below credit scores, as well as borrowers who don’t meet certain down payment guidelines. Lenders likely would have passed down to borrowers, could have cost a borrower with a $200,000 30-year mortgage about $4,000 extra over the life of the loan — or about $11.11 extra per month.

The fees were set to take effect in March and April. Critics in the mortgage and housing industry had argued that the fees were too high and that fee hikes on lenders are usually passed on to borrowers via higher interest rates. Your comments?

Source: “New FHFA director stops rate hikes short,” HousingWire (Dec. 23, 2013) and “Fannie Mae Fee Increases to be Delayed by FHFA Under Watt,” Bloomberg (Dec. 21, 2013)

California’s AG asks for a “Halt in Foreclosure Sales”

Here’s some interesting news to share with you! California’s attorney general has requested that the Federal Housing Finance Agency suspend foreclosure sales in the state for home owners with government-backed mortgages. 

Attorney General Kamala D. Harris has requested that home owners with loans backed by Fannie Mae and Freddie Mac get a temporary reprieve from foreclosures while housing regulators conduct reviews of whether at-risk home owners are eligible to have the amount they owe on their mortgage reduced. 

Fannie Mae and Freddie Mac have stated in the past that they’re opposed to mortgage principal reductions. The FHFA, which regulates Fannie and Freddie, has said that any such program would cost taxpayers $100 billion. 

More than half a million Californians have lost their home to foreclosure since 2008. What’s more, another half a million are in foreclosure or at “imminent” risk this year. Fannie and Freddie guarantee or own more than 60 percent of mortgages in California. 

Source: “California Seeks Suspension of Foreclosures,” Associated Press (Feb. 27, 2012) and “California AG Seeks Foreclosure Suspension,” MarketWatch (Feb. 27, 2012)

Freddie Loosens Credit Score Requirement for Refinacing

Freddie Mac announced it has eliminated its minimum credit score requirement for borrowers wanting to refinance, but they must have at least 20 percent equity in their home, HousingWire reports. Freddie Mac used to require a minimum credit score of 620. 

In following instructions from the Federal Housing Finance Agency, government-sponsored enterprises Freddie and Fannie Mae are both looking at how they can ease requirements to spur more refinances so more borrowers can take advantage of record-low mortgage rates.

Fannie Mae has removed a refinancing requirement that lenders must determine the borrower’s ability to repay — aimed at increasing refis and helping more underwater borrowers stay current on their mortgages. 

HousingWire reports that about 4 million loans serviced by Fannie Mae and Freddie Mac are underwater, in which the borrower owes more on their loan then their home is currently worth. 

Source: “Freddie Cuts Some Refi Credit Score Requirements,” HousingWire (Jan. 5, 2012)

More news from the “Sierra Foothills” of El Dorado, Placer, Amador and Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com

HARP Refinance Program Expanded

Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down.  The Federal Housing Finance Agency (FHFA) announced today that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac. Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013.  New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15.

More information is available from FHFA at http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf.