Mortgage Discussion for the Panhandle area

Another month into 2008 and a lot of movement in the financial industry. I will try and break some of the recent developments down so we all get a since of what is happening.

Let us start with the flood of FHA loans in the market. You may have noticed Government loans taking longer in underwriting over the past 60 days. That is because the market has changed from mostly conforming loans (Fannie Mae and Freddie Mac) to FHA, VA and U.S.D.A (Rural Development). That put a major squeeze on government underwriters and caused delays in loan closings across the nation. Now for the good news. All major banks and mortgage companies have also noticed the issue and staffed up to keep this from being a long term problem. We have seen underwriting turn times move from 17+ days to about four. Your future loans should all close on time, customer permitting. 

Great news from Fannie Mae! Fannie Mae has issued a new letter withdrawing the declining markets policy. That means no reduction in loan to value far any area in the nation. That is good news! I will however give you the whole truth. While Fannie Mae has lifted the declining markets policy the MI companies (Mortgage Insurance) have not. This means for the short term we may not see any difference in approveable loans. In the long term I believe you will see the MI companies withdraw the policy as well. This is the trend of loosing we are seeing so get ready for real estate to take off again.

More good news for qualifying a Rural Development loan. We know RD has income restrictions. You may not be aware that the government is looking at ways of loosening this program as well. This is not final but RD is trying to cut some of the tiers for income to make the program less complicated. I will use an example from Escambia County to try and explain. Currently the income limits are based on number of people in the household. A single person household is limited to $49,550.00 in yearly income. a two person household is limited to $56,600.00, 3 person $63,700.00 and four $70,750.00. Rural Development is looking at making the 1-2 person house hold limit at $56,600.00, the 3 or 4 person household at $70,750.00 and so on with the new limits. This will open up some more opportunities for home sales in our area.

I wrote all this to give you an idea of what is happening behind the front lines of financing. Hopefully you will agree with me that some positive moves are being made by the mortgage industry to allow more homes to sale. I hope you find this information good news and useful. If you need any help on FHA or any government loan please give me a call.