Fannie Mae and Freddie Mac may be bringing back 3% down mortgages
In a speech this week to the Mortgage Bankers Association, Mel Watt, the Director of the Federal Housing Finance Agency (which regulates Fannie and Freddie) announced that: “to increase access for creditworthy but lower-wealth borrowers, FHFA is …. working with the Enterprises (Fannie and Freddie) to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent.”
Earlier this year FNM discontinued its 97% Conventional Loan, which was described by Dan Green of The Mortgage Reports as: “a true, three-percent-downpayment mortgage program, for which the 3% downpayment may come as a gift. In many respects, it’s more aggressive that the FHA’s benchmark mortgage product in that guidelines are simpler and less-restrictive.”
Mr. Watt hopes that : “through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account “compensating factors.” Further details about these new guidelines will be available in the coming weeks as we continue to advance FHFA’s mission of ensuring safety, soundness and liquidity in the housing finance markets.”
Click here to read Mr.Watt’s remarks.
If you – or somebody you know – are considering buying or selling a home , or have questions about the market and/or current home prices, please feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty.
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Yet another great idea from Washington. . . . bring back 3% down mortgages! What are these people thinking? There have to be better ideas out there for fixing this mess. I remember seeing an interview on CNBC in August of 2013 where a firm had a solution for commoditizing a mortgage contract to trade under the CFTC that had NO CREDIT RISK associated with it! Why are no people talking about this idea?
See it Here:
http://www.bing.com/videos/watch/video/santelli-exchange-dead-mans-curve/3xjxr2xs
Having centrally cleared mortgage products used instead of conventional securitization models that are opaque and illiquid would solve a ton of problems for the entire mortgage industry. Futures contracts are marked to market daily and fully margined. They are centrally cleared so there is NO COUNTER PARTY RISK! I can’t believe we are heading down the exact same path we just traveled. The very definition of insanity – when will it end?