Seventy-Percent of Consumers Think Now is a Bad Time To Buy a Home-83% Of Millennial’s Feel That Way

According to Fannie Mae’s® Home Purchase Sentiment Index® (HPSI), 70% of consumers say it’s a bad time to buy a home while 25% feel it’s a good time to buy.  As the chart below illustrates, this is the highest level reached for it not being a good time to buy in the 3-year period the chart covers.  Actually, this is the highest level it’s reached since Fannie Mae began tracking the data in 2010.

Millennials are pessimistic about home buying…

The bottom chart also reflects the sentiment of consumers in the survey about buying a home now but is broken down by age group.  This chart shows the net percentage of those saying it’s a “good time to buy” less those saying “it’s a bad time to buy”.  The higher the line goes on the chart the more the good time to buy folks outweigh the bad time to buy.  As you can see, the black line, which depicts consumers in the 35-44 age group is the lowest on the chart with a net of -68.  This is the result of 83% of the consumers in this age group saying it is a bad time to buy and just 15% saying it’s a good time, resulting in a net of -68%.

Seniors have a better feeling about the market…

The red line depicts the sentiment of those 65 years and older and the net percentage there is -26%, so, while the percentage of people that feel now is not a good time to buy still outweighs the ones in this age group that think it is a good time, the resulting difference is about 40 points better than the millennial group.

Continue reading “Seventy-Percent of Consumers Think Now is a Bad Time To Buy a Home-83% Of Millennial’s Feel That Way

Fannie Mae & Freddie Mac Increase Maximum Loan Amounts

Last week, the Federal Housing Finance Agency  (FHFA)announced that effective January 1s, 2021, the maximum loan amounts for Fannie Mae and Freddie Mac conforming loans will be increased from $510,400 to $548,250.  Once a home buyers loan amount exceeds the Fannie and Freddie limits, their loan is considered a “jumbo” loan and typically less attractive terms, so an increase in the Fannie and Freddie limits is definitely helpful to home buyers in higher price ranges.

Fannie Mae and Freddie Mac are also increasing the loan limits for loans to purchase multi-family properties as well.  The multi-family property limits for 2021 are:

  • Two Units – $702,000
  • Three Units – $848,500
  • Four Units – $1,054,500

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Fannie Mae Offers Mortgage Payment Deferral Plans for Eligible Homeowners

Fannie Mae, the leading source of financing for home mortgages in the U.S. (they purchase home loans from lenders), earlier this week announced some payment deferral plans to help borrowers.  Fannie Mae is authorizing it’s loan servicers to provide options to borrowers that have fallen delinquent or are having trouble making their house payments,  which is likely a result of the financial impact on them of the COVID-19 pandemic.

While it’s complicated, there are several options that Fannie Mae has made available to loan servicers to offer to borrowers that are struggling.  Complete details are in Fannie Mae Lender Letter (LL-2020-05) but the highlights are below:

  • Eligibility criteria for a Payment Deferral:
    • The mortgage loan must be a conventional first lien mortgage loan, and may be a fixed-rate, a step-rate, or an ARM.(the property may be vacant)
      • As of the date of the evaluation, the mortgage loan must be 30 or 60 days delinquent (i.e., the borrower is not past due for more than two full monthly contractual payments); and
      • such delinquency status must have remained unchanged for at least three consecutive months, including the month of the evaluation.
    • And, the loan servicer must confirm that the borrower:
      • has resolved the hardship,
      • is able to continue making the full monthly contractual payment, and
      • is unable to reinstate the mortgage loan or afford a repayment plan to cure the delinquency.

There are some other conditions as well but those are the primary ones.  Assuming the borrower meets these requirements, there are several options available to them.  There are many options the lender can offer which include:

  • Defer the past due payments (without interest accruing) until the mortgage loan matures, until the property is sold or the loan is refinanced or paid off.

If the hardship that caused the borrower to fall behind has been resolved however the borrowers do not have the ability to pay the delinquent payments, another option is for the lender to offer to increase future payments for a period of time to make up for the delinquent payments.  If the borrower cannot afford the increased payments, that is when the payment deferral plan above kicks in.  If the borrower’s hardship has not been resolved, then Fannie Mae can offer a forbearance plan.

If you are a homeowner and having problems making your payments, the best thing to do is immediately call your loan servicer to see what options are available to you. 

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Forty-one percent of survey respondents think home prices will increase; up from thirty percent a year ago

Saint Louis Realtor, Dennis Normanst-louis-real-estate-realtor-dennis-normanForty-one percent of the respondents to the Fannie Mae National Housing Survey for January 2013 said they expect home prices to rise in the next 12 months which is down slightly from 43 percent last month but up significantly from a year ago when only 30 percent felt home prices would rise.   Ten percent of the respondents feel home prices will drop in the coming year and 45 percent said they feel prices will remain the same.

Continue reading “Forty-one percent of survey respondents think home prices will increase; up from thirty percent a year ago

Optimism in the Mortgage Markets for 2013; St Louis Mortgage Interest Rate Update

Fannie Mae has declared that housing is finally providing a tailwind to economic growth. The company’s December Economic and Strategic Report says that the market “has turned the corner and a sustained recovery is under way.”  Looking into 2013, economists predict mortgage originations will increase by 15% while refinance volume is expected to fall 26%.


Continue reading “Optimism in the Mortgage Markets for 2013; St Louis Mortgage Interest Rate Update

Saving interest…shorten your term; St Louis Mortgage Interest Rate Update

Mortgage rates have flattened out, but some borrowers are lowering their rates further by opting for a loan with a shorter term.

Freddie Mac says about 30% of borrowers this year have opted for shorter-term home loans when they refinance, with most picking a 15-year mortgage.  Shorter-term loans are particularly attractive to people “who have been homeowners for a number of years…or who want the security of knowing they will own their home free and clear when they retire,”

ask-the-expert Continue reading “Saving interest…shorten your term; St Louis Mortgage Interest Rate Update

Fannie Mae Launches "Know Your Options" Foreclosure Prevention Program

saint-louis-real-estate-dennis-normanFannie Mae has launched a new foreclosure prevention program called “Know your Options” that has been in development for about a year and has, as it’s top priority, “helping homeowners avoid foreclosure”.  The program includes working with and training 18 of it’s largest loan servicers as well as launching a website for consumers,, which contains educational tools and resources for homeowners that may be facing foreclosure and opening 12 “Mortgage Help Centers” in the areas hardest hit by the housing crisis.

Fannie mae sets new 30 day deadline to respond to short sales

dennis-norman-st-louis-realtor-By now almost everyone has probably heard a story about (or experienced themselves) the laborious, time-consuming and mind numbing process of trying to buy (or sell) a home on a short sale or, in other words, for less than is owed on the home with the lenders blessing. Unfortunately the lenders blessing, in many cases, has taken many weeks or even many months to get causing many buyers and sellers to give up along the way. Now though, thanks to a recent rule change by Fannie Mae, this process will be improved greatly and happen within 30 days in most instances. Continue reading “Fannie mae sets new 30 day deadline to respond to short sales

Quarterly National Housing Survey Shows that Americans of All Backgrounds Continue to Have Strong Aspirations to Own a Home

Attitudes About Homeownership as an Investment, Financial Constraints, and Mortgage Accessibility May Stand in the Way of Americans’ Purchase Decisions

Fannie Mae’s latest quarterly National Housing Survey focuses on the state of homeownership aspirations among Americans across all demographic groups. The survey finds that despite the recent housing crisis, most Americans continue to believe that owning their home is preferable to renting it. The data also indicate that while financial constraints and employment concerns may may be keeping potential homebuyers on the sidelines in the near term, future improvements in employment and personal finances, a pickup in interest rates in response to stronger economic growth, and stabilizing home prices may move Americans to act on their aspirations in coming years. Continue reading “Quarterly National Housing Survey Shows that Americans of All Backgrounds Continue to Have Strong Aspirations to Own a Home

Poll shows American’s expect home prices to decline in next 12 months

Dennis Norman, St Louis REALTOR - Fannie Mae National Housing SurveyThe Fannie Mae National Housing Survey for September shows consumers in the U.S. remain someone pessimistic about home prices, however over two-thirds (68 percent) of American’s surveyed said they thought now was a good time to buy a home and 63 percent said if they were going to move now they would buy a home.
Continue reading “Poll shows American’s expect home prices to decline in next 12 months

Double-dip recession concern by consumers is putting a damper on the housing market

Dennis Norman, St Louis REALTORFannie Mae’s Economics & Mortgage Market Analysis Group says that we are not out of the woods yet and that the economy is “flirting with another economic downturn” now after more than two years since the worst recession since the World War II era. Fannie Mae Chief Economist, Doug Duncan, said “the weakening economic backdrop, a persistently high unemployment rate, and fear of a double-dip recession are casting a shadow over the housing market.” Continue reading “Double-dip recession concern by consumers is putting a damper on the housing market

Is now a good time to buy a home?

Dennis Norman, St Louis REALTORSixty-nine percent of American’s polled in Fannie Mae’s National Housing Survey in August said that now is a good time to buy a home, this is up from 66 percent the prior month. Consumers are not in a home buying mode as a result of feeling good about the economy however as in the survey 78 percent said the economy is on the wrong track, up from 70 percent in July. Continue reading “Is now a good time to buy a home?

New reports paint bleak picture for housing market recovery

Dennis Norman St Louis Realtor - Housing Market - Housing RecoveryIt seems every time I start thinking it’s safe to use the “R” word (recovery) about the housing market, something happens to put the damper on it. The recent downgrading of the U.S. credit rating, which ultimately caused the Wall Street roller coaster ride, certainly hasn’t help. Then today, the National Association of Home Builders (NAHB) came out with a report saying “the recent economic news points to a slower housing recovery” and Fannie Mae, in their economic forecast released today saying “housing activity expected to weaken, despite recent declines in long-term interest rates”. Continue reading “New reports paint bleak picture for housing market recovery

Mortgage Relief and Foreclosure Moratorium for Missouri Homeowners Impacted by Recent Storms

Dennis Norman St LouisSpring storms in April caused 8 areas of the U.S. to be declared a National Disaster area, and another 9 more so far in May.  As a result of tornadoes, severe storms and flooding on April 19th, five counties in Missouri, Butler County, Mississippi County, New Madrid County, Saint Louis County, and Taney County, were declared a National Disaster areas on May 9th, making homeowners eligible for assistance, including possible mortgage payment relief and/or protection from foreclosure.  Continue reading “Mortgage Relief and Foreclosure Moratorium for Missouri Homeowners Impacted by Recent Storms

Fannie Mae Offering 3.5 percent Buyer Assistance on HomePath Properties

Fannie Mae announced today that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 percent in closing cost assistance. The initial offer must be submitted on or after April 11, 2011; and the sale must close on or before June 30, 2011 to be eligible for the incentive. Additionally, buyers must reside in the home as their primary residence (sorry, nothing for investors). Continue reading “Fannie Mae Offering 3.5 percent Buyer Assistance on HomePath Properties

Survey shows Americans gaining confidence in stability of home prices

Dennis Norman St LouisThe Fannie Mae Fourth Quarter National Housing Survey polled homeowners and renters alike to assess their confidence in homeownership as an investment as well as their views on housing finance and the overall economy. The survey revealed that Americans are more confident about the stability of home prices than they were at the beginning of 2010, although they aren’t so confident about the strength of the overall US economy. Continue reading “Survey shows Americans gaining confidence in stability of home prices

2011 Real Estate Market Expected to Show Some Improvement

Dennis Norman St LouisAh, it is so much fun to be able to write something positive about the real estate market!

According to an economic outlook report just issued by Fannie Mae, our country’s economy should “kick into higher gear” by the second quarter of 2011. This positive outlook is the result of improvements in consumer spending, consumer confidence, increased demand for goods and services and falling unemployment claims.

For 2011, Fannie Mae, in their December 2010 forecast, is forecasting growth of 3.4 percent which is an improvement from the 2.9 percent growth in 2011 they previously forecast. The big caveat is that this assumes “improving labor market conditions.” What this means for the real estate market, more specifically the housing market, is “despite rising mortgage rates, our (Fannie Mae) forecast for home sales is stronger than the previous forecast, given our brighter economic growth and labor market outlook,” said Fannie Mae Chief Economist Doug Duncan. Mr. Duncan goes on to say that his expectation of increased home sales is due in part to “modest additional declines in home prices” making homes even more affordable and tempting buyers as their”employment and income outlook brightens.”

After the rather sad housing market in 2010 saying 2011 will improve probably isn’t saying a whole lot (sort of like celebrating on January 2nd that you have been able to stick to your new years resolution all year thus far) but hey, it’s a start and at least things are being forecast to go the right direction! Baby steps……

Fannie Mae Releases Appraiser Independence Requirements

Dennis Norman

Now that the controversial (to put it mildly) Home Valuation Code of Conduct (HVCC) has been put to rest as part of The Dodd-Frank Wall Street Reform, Fannie Mae has released their “Appraiser Independence Requirements“.  Fannie Mae says the purpose of these requirements is to:

Fannie Mae announces support for Military Homeowners

Surviving Spouses and Wounded Warriors Eligible for Special Forbearance

At an event yesterday at the Pentagon, Fannie Mae and the U.S. Army announced new initiatives to help service members who are struggling with their mortgage payments avoid foreclosure.   The effort includes a mortgage payment forbearance of up to six months where the death or injury of a service member on active duty causes a hardship for impacted military families with a mortgage obligation. Continue reading “Fannie Mae announces support for Military Homeowners

New Incentives for Buyers of Fannie Mae Foreclosures; Over 700 Homes Available in St. Louis

Dennis Norman

Fannie Mae is offering 3.5 percent in closing cost assistance and a $1,500 bonus to buyers’ real estate agent or broker for people purchasing a Fannie Mae-owned HomePath® property.

Fannie Mae is trying to entice buyers to buy one of their Continue reading “New Incentives for Buyers of Fannie Mae Foreclosures; Over 700 Homes Available in St. Louis

Owner-occupants get first shot to buy Fannie Mae foreclosures; Investors must wait

Dennis Norman

Fannie Mae announced this week that it is expanding the Freddie Mac First Look Initiative so any home shopper can buy a HomeSteps® home as their primary residence during the first 15 days of the property’s listing without competition from investors. HomeSteps is the real estate sales unit of Freddie Mac and markets a nationwide selection of Freddie Mac-owned homes. Continue reading “Owner-occupants get first shot to buy Fannie Mae foreclosures; Investors must wait

National Housing Survey shows 70 percent think it is a good time to buy a house

Dennis Norman

Fannie Mae conducted a National Housing Survey poll between June 2010 and July 2010 to asses homeowners and renters’ confidence in home-ownership as an investment, the current state of their household finances and overall confidence in the economy. The finding from this survey were compared with a similar survey conducted by Fannie Mae from December 2009 to January 2010 as well as one conducted back in 2003. Continue reading “National Housing Survey shows 70 percent think it is a good time to buy a house

Countrywide VIP Loans To Fannie Mae Execs Are Under Investigation

Dennis Norman

Fannie Mae, after losing $59.8 Billion in 2008 and then $74.4 Billion in 2009, reported yesterday that things are looking up and they lost only $1.2 Billion in the 2nd quarter of this year. This “good” news comes on the heels of documents being released two weeks ago showing that Countrywide made, what appears to be, some “below-market” mortgages to employees of Fannie Mae under a VIP loan program. There have been allegations that perhaps this was done in exchange for favors. Continue reading “Countrywide VIP Loans To Fannie Mae Execs Are Under Investigation

Homeowners Should Think Twice if Considering a ‘Strategic Default’

Dennis Norman

Last month I wrote about a new policy implemented by Fannie Mae that would “lock-out” borrowers from getting a Fannie-Mae insured loan for 7 years if they did a “strategic default” or otherwise did not act in good faith and were foreclosed upon. In a nut shell, the borrower that Fannie Mae is targeting here is the borrower that has the financial ability to make their payments, accept a loan modification or other “work-out” from Fannie Mae but instead chooses just to walk away from their home and letting the lender foreclose.

In addition to locking out borrowers from a new loan for 7 years Fannie Mae has also made it clear in a recent announcement that they will “take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans“. Obviously, they can only do this in those States that allow a lender to sue a borrower for a deficiency but if you live in one of those states are are thinking of doing a strategic default on a Fannie Mae insured loan, you may want to think twice. Or at least be sure you get appropriate legal advice first and explore other options that are available to you.

Fannie Mae said that this month (July) they will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.



Fannie Mae’s New Rule Punishes Borrowers That ‘Walk-Away’

Dennis Norman

So, you have the money to pay on your ‘underwater’ mortgage, or to afford the reduced payment amount offered to you under the HAMP program, but think, rather than throw good money after bad you’ll just do like so many borrowers are doing and ‘walk-away‘? Well, if you have any plans to buy a house again in, say the next seven years, particularly with a Fannie Mae loan, think again.

Today Fannie Mae announced policy changes to “encourage borrowers to work with their servicers”. These policy changes include, a seven-year “lock-out” period for borrowers that default that had the capacity to pay, or did not complete a workout alternative offered to them in good faith. Those borrowers will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers that in fact do have extenuating circumstances may be eligible for a new home loan in a shorter period.

“We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

Thinking about a “Strategic Default”?

There has been a lot of talk lately about borrower’s that “strategically default”; for example, borrowers that have the ability to pay their mortgage payments but stop doing so in the hopes they can get out from under their home in an easier method than selling it in a down market, particularly if they are underwater on their mortgage.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae’s Selling Guide Announcement SEL-2010-05.

Is The Government Going to Push Us Into Another Housing Bust?

Dennis Norman

UPDATE June 21, 2010- I said I would update this post after the proposed rules were published on the Federal Register with info on how to submit a comment -If you would like to comment, see the comment instructions in the Federal Register (I highlighted them) by clicking here -end of update.

June 4, 2010

Are they really going to repeat the same mistakes that helped cause this housing recession?

I say this because of a release I received from the Federal Housing Finance Agency (FHFA) last week announcing that the FHFA “has sent to the Federal Register a proposed rule implementing provisions of the Housing and Economic Recovery Act of 2008 (HERA) that establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-, low- and moderate-income families in three specified underserved markets — manufactured housing, affordable housing preservation, and rural markets.” While the statement is a little ambiguous on the surface it sounds like a nice thought, “serve the underserved.”

However, as I read on I couldn’t believe my eyes as I read other aspects of the proposed rule. The “Enterprises” (Fannie and Freddie) would be required to take actions to “improve the distribution of investment capital available for mortgage financing for underserved markets” and are expected to continue their support for affordable housing (again, something that sounds great, just depends how you plan to go about supporting “affordable housing”). The rule would establish a method to evaluate the Enterprises performance in these underserved markets for 2010 and subsequent years. Of the four criteria the enterprises are to be evaluated under, one really got my attention; “the development of loan products, more flexible underwriting guidelines, and other innovative approaches to providing financing“. WHAT?? More FLEXIBLE underwriting, INNOVATIVE approaches to provide financing? Isn’t this the stuff that got Fannie Mae and Freddie Mac (not to mention thousands of homeowners) in trouble to start with? Now, I don’t claim to be an economist or even that smart for that matter, but this sure appears to me to be the Federal Government putting pressure on Fannie Mae and Freddie Mac to make loans they shouldn’t be making….again.

I’m not saying that the pressure on Fannie Mae and Freddie Mac to make loans to borrowers that weren’t really qualified is the only cause of the housing bust as there were many contributors to it, but this was certainly one of them and definitely a large part of what led to their financial demise and need for a tax-payer bailout.

A book I’ve read that I think has the most complete and thorough analysis of what caused the housing market to have it’s longest positive run only to be followed by a collapse is Thomas Sowells’ “The Housing Boom and Bust“. In his book Mr. Sowell says this about the housing bust and the demise of Fannie Mae and Freddie Mac; “in reality, government agencies not only approved the more lax standards for mortgage loan applicants, government officials were in fact the driving force behind the loosening of mortgage loan requirements.” So is this deja vu or what?

Mr. Sowell goes on to say “the development of lax lending standards, both by banks and by Fannie Mae and Freddie Mac standing behind the banks, came not from a lack of government regulation and oversight, but precisely as a result of government regulation and oversight, directed toward the politically popular goal of more ‘home ownership’ through “affordable housing,” especially for low-income home buyers. These lax lending standards were the foundation for a house of cards that was ready to collapse with a relatively small nudge.”

Correct me if I’m wrong, but it appears to me the government has opened the deck of cards and begun construction again.

There will be a 45 day period for public comments once the proposed rule is published in the Federal Register. I just tried to access the website site and it is down so I don’t know if it’s published yet but will check again and update this post with info on how to comment on the rule if you like.


Fannie Mae Issues Guidelines For HAFA Short-Sales and Deed-in-Lieu

UPDATE- June 2, 2010: The National Association of REALTORS obtained answers from the Treasury Department on 3 common questions about HAFA:

  1. agents are not permitted to rebate a portion of their commission to the buyer,
  2. sellers who are real estate agents must list their home for sale with another broker, not their own broker, and
  3. the incentive allowed for subordinate lien holders (6% of any one subordinate lien, up to a total of $6,000 for all subordinate liens) is a hard cap and may not be supplemented from any source.

Dennis Norman

In March I did an update on the Home Affordable Foreclosures Alternative (HAFA) Program which was scheduled to go into effect April 5, 2010.  Today, Fannie Mae issued guidelines to their servicers outlining the policies and produres Fannie Mae had adopted as a result of HAFA.

What is HAFA?  In a nutshell it gives qualifying homeowners the opportunity to do a short-sale or deed-in-lieu rather than face foreclosure:

The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives help the lender out by avoiding the potentially lengthy and expensive foreclosure proceedings and also by protecting the property by minimizing the time it is vacant and subject to vandalism and deterioration. These options help out the borrower by avoiding the foreclosure process and the uncertainty that comes with it and allows the borrower to negotiate when they will give up possession of their home as well as, under the HAFA program be released from any further liability from the loan including short-fall and deficiencies.

Highlights of the guidelines given to mortgage servicers by Fannie-Mae:

  • Servicers are “encouraged to adapt their processes to implement these Fannie Mae HAFA policies and procedures immediately;” however, they have until August 1, 2010 to implement them.
  • The HAFA  Short-Sale and HAFA DIL (deed-in-lieu) program will be offered to borrowers through December 31, 2012

Borrower Eligibility for HAFA Consideration:

  • A borrower cannot be considered for HAFA until the borrower has been evaluated for a HAMP modification (including, but not limited to, providing all required income documentation).
  • Once a borrower has met all of the eligibility criteria for HAMP, the borrower must be considered for a HAFA short sale or DIL (after all home retention options have been considered) if the borrower:
    • was not offered a trial modification due to inability to meet the HAMP qualifications (for example, did not pass the net present value (NPV) evaluation or meet the target monthly mortgage payment ratio based on verified income);
    • failed to complete the trial period successfully;
    • became two consecutive payments (31 or more days) delinquent on the modified mortgage loan; or
    • requests a short sale or DIL.
  • Lender’s are not allowed to consider a borrower for a Fannie Mae HAFA short sale or DIL (without consent from Fannie Mae) if:
    • a foreclosure sale is scheduled to be held within 60 days of the borrower’s request for a Fannie Mae HAFA short sale or DIL, ordetermination that a borrower is ineligible for HAMP, or;
    • a foreclosure proceeding could be initiated and reasonably be expected to result in a foreclosure sale being held within 60 days of the borrower’s request for a Fannie Mae HAFA short sale or DIL or determination that a borrower is ineligible for HAMP; or;
    • the mortgage loan is secured by a property in Florida on which foreclosure proceedings are pending, judgment has been obtained, or a hearing on summary judgment or trial is scheduled within 60 days.

Financial Requirements of Borrower for HAFA:

The lender, prior to deciding if the borrower is eligible for HAFA, must determine if the borrower has:

  • the ability to continue making the mortgage payments but chooses not to do so; or
  • substantial unencumbered assets or significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment (including tax and insurance payments) or $5,000, whichever is greater; or
  • high surplus income.

So the bottom line here is, if you have a bunch of assets, money in the bank or high income relative to you debt, Fannie Mae is not going to be interested in letting you walk away from your deficiency after a short-sale, or DIL.

On question that has come up on other posts I’ve written about this, is the effect of bankruptcy on eligibility for HAFA….Here’s the answer from Fannie Mae:

  • A borrower in an active Chapter 7 or Chapter 13 bankruptcy case must be considered for a Fannie Mae HAFA short sale or DIL if the borrower, borrower’s counsel, or bankruptcy trustee submits a request to the servicer. However, the servicer is not required to solicit borrowers in active bankruptcy cases for shorts sales or DILs. With the borrower’s permission, a bankruptcy trustee may contact the servicer to request a short sale or DIL. The servicer and its counsel must work with the borrower or borrower’s counsel to obtain any court and/or trustee approvals required in accordance with local court rules and procedures. The servicer must extend the required time frames outlined in this Announcement as necessary to accommodate delays in obtaining bankruptcy court approvals or receiving any periodic payment when made to a bankruptcy trustee.

Lenders must, upon determination of eligibility for a HAFA Short-Sale or DIL, determine the fair market value of the property:

  • As soon as a borrower is determined to be eligible for a Fannie Mae HAFA short sale or DIL and has demonstrated a willingness to participate, the servicer must take the necessary steps to determine the market value of the mortgaged property. Fannie Mae will require a broker price opinion (BPO) based on an interior and exterior inspection of the property or, if licensing requirements in the state dictate use of an appraisal for these purposes, an appraisal
  • The BPO (or appraisal, if required) must be dated within 90 calendar days of the date the relevant HAFA Agreement is executed by the servicer.

Allowable Fees on Short-Sale:

Fannie-Mae will allow:

  • real estate sales commission customary for the market. The servicer may not require that the commission be reduced to less than 6 percent of the sales price of the property;
  • real estate taxes and other assessments prorated to the date of closing;
  • local and state transfer taxes and stamps;
  • title and settlement charges typically paid by the seller;
  • seller’s attorney fees for settlement services typically provided by a title or escrow company;wood-destroying pest inspections and treatment, when required by local law or custom;
  • homeowners’ or condominium association fees that are past due, if applicable.
  • Fees paid to a third party to negotiate a short sale with the servicer (commonly referred to as “short sale negotiation fees” or “short sale processing fees”) must NOT be deducted from the sales proceeds or charged to the borrower.
    • Additionally, the Servicer, its agents, or any outsourcing firm it employs must not charge (either directly or indirectly) any outsourcing fee, short sale negotiation fee, or similar fee in connection with any Fannie Mae loan.

In addition, Fannie Mae will allow;

  • The Lessor of 6% of the balance of a junior lien, or $6,000, to settle the second lien.
  • $3,000 to the Seller, to be paid out of sale proceeds, to help defray the costs of relocation.

Short-Sale Approval Should be Faster:

One of the major hindrances to short-sales has been the amount of time it takes for a lender or servicer to respond to an offer to purchaser, many times taking several months.  Under these new guidelines that should not be a problem because, provided the Seller’s Agent has submitted all the required document to Fannie Mae (they only have 3 business days to submit) then the servicer must respond to the offer within 10 business days indicating acceptance or rejection of the offer. This is huge and should really help facilitate short-sales.

Deed-in-Lieu Eligibility:

Generally, for a borrower to be eligible for a Fannie Mae HAFA DIL, the mortgaged property must have been listed for sale at market value for 120 days or more. A servicer may waive the requirement that the property securing the mortgage loan previously be listed for sale in cases involving:

  • a serious illness or disability,
  • a deceased borrower or co-borrower,
  • a borrower or co-borrower who has been relocated or who has been deployed by the military,
  • a determination that local market conditions would impede a sale of the property,
  • a borrower who demonstrates an unwillingness or inability to maintain or market the property during the listing period, or
  • a borrower who has expressed an interest in doing a Deed for Lease

This is simply an overview of the Fannie-Mae guidelines and the HAFA program…there is much more, but this gives you the idea.  For starters, this is nothing that  a homeowner would want to take on alone in my opinion.  I think you need a qualified real estate broker or agent, that has in-depth knowledge about HAMP and HAFA and the short-sale process.

To get more information I suggest your read my post from March, you can access that by clicking here, or if you really want to have some fun, you can read the complete Fannie-Mae guidelines by clicking here.


Can You Obtain a Home Loan If you Did a Short Sale or Deed-in-Lieu?

Dennis Norman

In an effort to “support overall market stability and reinforce the importance of borrowers working with their lenders when they have difficulty paying their mortgages”, Fannie Mae has eased their policies with regard to the eligibility of borrowers to obtain a new mortgage loan after having a short-sale or deed-in-lieu of foreclosure.  The “waiting period” that someone must wait before getting a new mortgage after a short-sale or deed-in-lieu has been shortened in certain situations.

Changes to the Waiting Period After a Short-Sale or Deed-in-Lieu of Foreclosure:

  • Deed-In-Lieu of Foreclosure
    • Current waiting period – 4 years with additional requirements after 4 years for up to 7 years
    • New waiting period – 2 years for 80 percent LTV (loan to value) mortage, 4 years for 90 percent LTV and 7 years for higher LTV’s
  • Short-Sale
    • Current waiting period – 2 years
    • New waiting period – 2 years for 80 percent LTV (loan to value) mortage, 4 years for 90 percent LTV and 7 years for higher LTV’s

If you had “extenuating circumstances” that caused the need for the short-sale or deed-in-lieu there are different guidelines for your waiting period and Fannie Mae has made changes to them as follows:

  • Deed-In-Lieu of Foreclosure
    • Current waiting period – 2 years with additional requirements after 2 years for up to 7 years
    • New waiting period – 2 years for 00 percent LTV (loan to value) mortage.
  • Short-Sale
    • Current waiting period – same as above, no exceptions currently.
    • New waiting period – 2 years for 90 percent LTV (loan to value) mortage.

I would say most borrowers that have had to do short-sales and deeds-in-lieu have had extenuating circumstances that caused it, so these changes I would think give them some hope.  With a ten percent down payment they can obtain a mortgage again as soon as two years…maybe by then the market will be looking a little better.


Housing Recovery Dependant on Inventory Reduction

Dennis Norman

Housing is stabilizing but excess inventory and shadow supply are hindering recovery according to the April 2010 Economic Outlook released today by Fannie Mae’s Economics & Mortgage Market Analysis Group.

The report projects that new home sales (which are at record lows) will be slow to recover until inventory of existing homes and the foreclosure overhang are worked off. The comments about existing home sales were more optimistic saying key indicators for existing home sales, including pending home sales and purchase applications, are showing good signs of a pickup.

Jobs, a driving force for housing, are now moving in the right direction according to the report. Fundamentals of the labor market appear to be improving as layoffs have slowed and hiring is showing signs of life. March payroll employment increased by 162,000, the largest gain in three years; temp employment posted a sixth consecutive monthly gain; and the average workweek increased. On the downside, unemployment will remain elevated for some time, despite the peak unemployment rate of 10.1 percent likely having occurred in October 2009.

Highlights of the housing forecast contained in the report:

  • The rate of new home starts is projected to increase from quarter to quarter throughout 2010 and 2011
    • New home starts for 2010 (single family) are projected to come in at 570,000 homes and in 2011 856,000 homes
  • The rate of sales of new homes is also projected to increase from quarter to quarter throughout 2010 and 2011 as well.
    • New home sales are expected to come in at 374,000 in 2010 and 612,000 in 2011 (Fannie Maes 2010 estimate is more optimistic than my estimate of 336,600 – 355,000 homes)
  • The rate of existing home sales is expected to increase in the second quarter this year but then drop back down in the third quarter and finish 2010 with 5,464,000 homes sold. For 2011 existing home sales are projected to improve slightly toward the end of the year finishing 2011 with 5,946,000 existing homes sold.
  • Median home prices are expected to decrease 1.0 percent from 172,500 for 2009 to $170,800 in 2010 and then increase by $600 to $171,400 in 2011.
  • Interest rates on fixed-rate mortgages are projected to increase from 5.04 percent for 2009 to 5.23 percent in 2010 and 5.69 percent in 2011.

Housing Recovery ‘Setback’ According to Fannie Mae Report

Dennis Norman

According to the Economics and Mortgage Market Analysis report just published by Fannie Mae, the weather was the culprit for the slow-down in home sales at the beginning of this year however, we did not get the boost they were anticipating from the extension of the tax credits. “Unfortunately, despite the high hopes associated with the extended and expanded homebuyer tax credit, housing activity appears to have faced a setback that went beyond the impact of adverse weather conditions. ” On a somewhat positive note, the analysts state they view the housing setback “to be a temporary one, and continue to expect activity to rebound later in the year but at a lower trajectory than previously projected.”

The report did not have much in the form of good news concerning new home sales and construction, citing:

  • Residential construction spending increased in January, however, “the gain was entirely due to expenditures on home improvement.”
  • Spending on new construction fell despite a modest increase in units of housing starts during the month, as the average cost per unit declined sharply.
  • Homebuilding activity has improved substantially from its depressed level a year ago, with single-family starts reaching 33 percent above their level in January 2009. A leading indicator of starts pointed to continued increase in the near term, as single-family permits rose for the third consecutive month.
  • Both new and existing home sales dropped sharply in January. New home sales fell for the third consecutive month in January to a level that surpassed the previous low recorded a year ago. A string of declines in new home sales caused the months’ supply to increase in each of the past three months, reaching the highest level since May 2009. Existing home sales have fared better. Despite two consecutive sharp drops, January sales remained nearly 12 percent above their record low.

Looking forward, here is what the Fannie Mae analysts are predicting:

  • Home sales will likely fall further in February, suggested by a sharp decline in the pending home sales index in January. Furthermore, mortgage applications to purchase homes have remained near their lowest level since 1997, according to the four-week moving average of the Purchase Index in the Mortgage Bankers Association Weekly Applications Survey.
  • Weak housing demand bodes poorly for the housing starts outlook. As a result, we revised downward our projected housing starts for the first half of this year.
  • We continue to expect home sales to rebound in the second quarter, as homebuyers rush to close sales before the expiration of the second tax credit in June.
  • In the third quarter, we expect a payback as the tax credit will likely pull some of the demand forward. By the end of the year, if the labor market improves as expected, sales should start to trend up on a sustainable basis.
  • For all of 2010, we project a nine percent increase in total home sales, compared with an increase of 12 percent in the previous forecast. Home price declines moderated in 2009 and we expect the trend to continue this year.

One of the keys to the forecast is “if the labor market improves”……another big variable is going to be interest rates. They still remain at near historic lows, and the fed’s keep telling us that the risk of inflation is low but I’m a little skeptical about rates and are concerned we may be seeing higher mortgage rates by year end. If unemployment improves significantly and if rates hold reasonably steady hopefully we will see the recovery that is being forecasted. Couple of BIG IF’s in my humble opinion though….