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

Wildfire Victims Get ‘Mortgage Reprieve’

Homeowners affected by the California wildfires may be eligible to defer their mortgage payments for up to 12 months. Mortgage financing giants Fannie Mae and Freddie Mac have issued guidelines for wildfire victims with single-family mortgages.

Victims may be eligible to stop making mortgage payments in three-month intervals, up to 12 months. They also may be eligible to avoid late fees during this temporary payment break, and to not have delinquencies reported to the credit bureaus.

Mortgage servicers have been authorized by Fannie and Freddie to suspend or reduce a homeowner’s mortgage payments immediately for up to 90 days without any contact from the homeowner if the servicer believes the homeowner has been affected by the disaster. For any additional payment forbearance of up to 12 months, homeowners will need to reach out to their lenders. Fannie Mae and Freddie Mac provide disaster relief information.

Also, HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and now face the task of rebuilding or buying another home. Borrowers with FHA-approved lenders may be eligible for 100 percent financing, including closing costs.

Source: “HUD Announces Disaster Help for Wildfire Victims,” Napa Valley Register (Oct. 19, 2017); “Fannie Mae Reminds Homeowners and Servicers of Mortgage Assistance Options for Areas Affected by California Wildfires,” Fannie Mae (Oct. 13, 2017); “Freddie Mac Confirms Disaster Relief Policies Amid California Wildfires,” Freddie Mac (Oct. 13, 2017)

The Big Down Payment Myth

39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase. Twenty-six percent believe they need to put down 15 to 20 percent, and 22 percent say they need a down payment of 10 percent to 14 percent to buy, according to the National Association of REALTORS®’ 2017 Aspiring Home Buyers Profile report.

But now for the reality: The average down payment on a purchase mortgage was just 11 percent in 2016. And that’s just the average; often times down payments are much lower. For borrowers under the age of 35, the average down payment was just under 8 percent, according to NAR’s survey.

There are many mortgage options that offer the opportunity to make low or even no down payments. For example, the Department of Veterans Affairs and the U.S. Department of Agriculture offer no-money down loans to those who are eligible. In 2016, 16 percent of buyers under the age of 35 put no money down on their home purchase.

Further, the largest share of loans for buyers under age 35 last year were for people putting down less than 5 percent on a home purchase (or about $3,500). The 3 percent down payment programs backed by Fannie Mae and Freddie Mac, and the 3.5 percent FHA mortgage that primarily targets first-time buyers, are both helpful programs to consider. These loan programs don’t require unblemished credit either. Please contact us for more details (no obligation).

Source: “Attention First-Time Buyers: Here’s the Key Stuff You Don’t Know About Mortgages,” realtor.com® (Feb. 9, 2017)

Predictions Roll in: 2017 Housing Forecasts

We can expect a hot year for home sales in 2017, according to recent forecasts from the National Association of REALTORS®, the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae, etc!

NAR is predicting existing-home sales to reach 6 million in 2017, higher than its 5.8 million forecast for this year. But other entities are even more bullish. MBA is predicting home sales to eclipse 6.5 million next year, while Fannie Mae and Freddie Mac are both predicting 6.2 million.

A huge wave of Generation Yers, who have delayed home buying, are emerging into their key buying years. They are predicted to keep home sales and condo sales strong well into 2020, according to economists.

Source: “Home Sales Expected to Increase Nicely in 2017,” Keeping Current Matters (Sept. 29, 2016) and “U.S. Housing Market Forecast – Strong 2017 to 2020,” GordinCollins.com (Sept. 24, 2016)

Fannie, Freddie Halt Foreclosures for the Holidays

Mortgage financing giants Fannie Mae and Freddie Mac announced they will suspend foreclosure evictions during the holiday season. The holiday moratorium, which the government-sponsored enterprises have done for the last few years, will begin Dec. 18 and run until Jan. 3, 2016.

During that time, Fannie Mae and Freddie Mac say they will not conduct any eviction lockouts and allow families to remain in their homes during the holidays. However, legal and administrative proceedings for evictions will continue during that time, but families will be permitted to stay in their homes.

The moratorium will apply to all foreclosed, occupied single-family homes as well as 2-4 unit properties on which Freddie Mac or Fannie Mae guarantees or owns the mortgages.

“As we have done in past years, we are suspending evictions during the holidays,” says Joy Cianci, senior vice president of credit portfolio management for Fannie Mae. “We also continue to remind home owners who may be struggling with their mortgages to reach out for help. Options are available to avoid foreclosure, and we want to help pursue those options whenever possible.”

Source: “Fannie Mae, Freddie Mac Suspend Foreclosure Evictions During Holidays,” HousingWire (Dec. 10, 2015)

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)

Home Buyers: ‘Do Not Fear’

Home shoppers no longer need to tremble all the way to the lenders’ office or have nightmares over being denied  a home loan – all the troubles that have been prominently spotlighted by many news reports in recent years. A new report confirms: It’s getting easier to get a mortgage – and as a bonus, borrowing costs are still low.

Over the past year and a half, the federal government and enterprises have taken several steps to open up the credit box, and the efforts may finally be showing signs of paying off.

Credit scores on closed loans in September dropped to the lowest level since Ellie Mae began collecting the data in August 2011, according to Ellie Mae’s latest Origination Insight Report. The average FICO score for closed loans has fallen throughout the year – from 731 in January to 723 in September.

Source: “Is the Credit Box Finally Showing Signs of Opening Up?” HousingWire (Oct. 21, 2015) andFreddie Mac

The Next Three Months: ‘Best Time to Buy’

Low mortgage rates, declining home prices, and homes that are lingering on the market longer are three main reasons why the next three months could be the best time to buy so far this year, says Jonathan Smoke, realtor.com®’s chief economist.

“The spring and summer home-buying seasons were especially tough on potential buyers this year with increasing prices and limited supply,” Smoke says. “Buyers who are open to a fall or winter purchase should find some relief with lower prices and less competition from other buyers.”

The biggest challenge buyers will likely face buying in the next three months is the limited number of choices. There are fewer homes for-sale this fall than last year plus the housing inventory has already peaked for 2015, Smoke says and we agree.

Source: “Mortgage Rates: Three Reasons to Buy in the Next Three Months,” Nerdwallet (Oct. 2, 2015)

3%-Down Payment Loans Make Strong Debut

Freddie Mac’s new mortgage product that allows borrowers to put down just 3 percent is off to a strong start, says Freddie Mac’s Chief Executive Donald Layton.

Lawmakers had expressed concern about Freddie Mac’s 3 percent down payment option loans, which debuted in March, arguing that it could lead to losses at the government-backed company. The Federal Housing Administration also supports low down payment loans but requires more insurance from home owners than Freddie Mac’s.

By the end of June, Freddie Mac’s post-2008 business has increased to 63 percent of its single-family credit guarantee portfolio. Also, its single-family serious delinquency rate – loans that have payments late by 90 days or more — stood at 1.53 percent in the second quarter, the lowest since November 2008 and below the national rate of 4.24 percent.

Source: “New 3%-Down Mortgage Off to ‘Good Start,’ Freddie Mac Chief Says,” MarketWatch (Aug. 4, 2015)

It’s Becoming Easier for Buyers to Get a Mortgage

Lenders are showing signs of loosening up when it comes to home buyers seeking a mortgage. The Mortgage Bankers Association’s Mortgage Credit Availability Index ticked up slight in April, following an increase the previous month too. Increases in the index are indicative of an overall loosening of credit.

MBA’s index shows that mortgage credit availability has increased consistently over the last several months, coinciding with recent announcements from the federal government of programs that have been designed to open the credit box. Fannie Mae and Freddie Mac’s move to back 3 percent down payment loans as well as the Federal Housing Administration’s action to reduce its mortgage insurance premiums have helped ease credit, MBA Chief Mike Fratantoni says.

Other government offerings also helped to ease credit even more in the latest report, reflecting April data, MBA notes.

Source: “MBA: It Keeps Getting Easier to Get a Mortgage,” HousingWire (May 12, 2015) and “REALTORS® Confidence Index,” National Association of REALTORS® (April 2015)