My goodness...yet another trip down the Freddie/Fannie lane...
Why is it so important to contact your database of clients TODAY? Because there are changes coming down...BIG changes and this one is a WHOPPER.
I cannot stress enough to get your 100% buyers to the closing table as soon as possible. With these changes, they may not get that chance (thus, the reason for the subject line above!).
For that matter, call ALL of your clients who are in need of near-future mortgage financing. With the upcoming post-delivery fees, rates are going to be much higher under a variety of curcumstances.
On to business...
Yesterday, Freddie Mac announced wide-sweeping changes to their pricing and product line structure. These are in addition to changes announced previously, and already in place with most lenders. (Fannie has not yet followed suit, but is expected to so that it can avoid buying the loans that Freddie no longer wants.)
Here is a summary of the upcoming changes:
- Discontinuing purchases of most mortgages with LTV/CLTV over 97%. What does that mean? They do not want your 100% deals anymore. This is with exception to Home Possible, but ONLY if you have at least a 700 credit score.
50-75 basis point delivery fee for certain credit score and LTV combinations. The revised credit score "buckets" are increasing to: 680-700, 701-719 and 720+. Increased delivery fees mean higher rates to our clients! And what ever happenedd to 660-679? Now those with 680-719 will have to pay higher rates, too??? Uugh!
30 basis point delivery fee for ALL mortgages with an LTV over 80% and a credit score of less than 740. What? And I thought anything over 700 was worth celebrating over!
Discontinuation of Freddie Mac 100 and Alt 97 with affordable 2nds. These are 100% programs. I'm sure we'll see the same thing from Fannie with regard to their Fannie Flex 100% LTV loan.
For loans that receive an A-minus offering, they are increasing the down payment requirement AND increasing the delivery fee to 125-275 basis points. Ouch!
For the complete details, please refer to Freddie Mac's Overview of Recent Pricing and Credit Changes for Sellers.
Now more than ever, we should be contacting our clients. With so many housing options available in our markets and the very reality of underwriting guidelines getting steeper, we need get out and communicate this information to our buyers today. Otherwise, I may be saying..."I told you so"!!!
Happy Selling,
Sherri Sherpy
Minnesota Mortgage Mom
Chris,
You are right. FHA is going to be our "best friend", if it isn't already. I hope that with the March 31st ruling, that Nehemiah will be allowed to stay!
Jim,
Thank you for stopping. My gosh, you've made a great point...back to more "normal" lending practices. How soon we forget that these changes are the way we used to do business every single day!