graphrix_IHB
New member
Fannie Mae announced <a href="https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2007/0722.pdf">new guidelines on LTV</a> restrictions in declining markets. Hat tip <a href="http://www.housingwire.com/2007/12/06/fannie-mae-introduces-adverse-market-loan-fees-reduces-financing-in-areas-hardest-hit-by-price-declines/">Housingwire</a>.
<em>When a property is located in an area identified as declining, Fannie Mae will now require the lender to offer financing at LTV and CLTV ratios that are five percentage points below the maximum ratios allowed for the selected mortgage product. For example, when the highest LTV allowed for a particular mortgage product is 100 percent, maximum financing would be 95 percent if the subject property is located in an area identified as declining. (When the mortgage is subject to subordinate financing, the CLTV ratio for all outstanding mortgages is used for this purpose).
Fannie Mae strongly encourages lenders to use supplemental sources and tools to independently assess current housing trends, unless the appraisal indicates that the subject property is located within a declining market. When the appraisal notes that the subject property is in a declining market, the maximum financing policy must be applied. When the appraisal does not indicate that the subject property is located within a declining market, Fannie Mae strongly urges lenders to implement processes and apply supplemental sources and tools to validate current housing trends and not rely solely on the information reflected in the appraisal. There are several services available that can be used by lenders and appraisers to assess current housing trends, including:
S&P/Case-Shiller® Home Price Indices. These indices rely on purchase price and related information obtained from county assessor and recorder offices.
Office of Federal Housing Enterprise Oversight (OFHEO) Index. For indications of market decline, lenders should use the index based on purchase loan data. Purchase-only indexes at the state level can be found at www.ofheo.gov/download.asp.
National Association of REALTORS® (NAR) statistics on changes in median prices. NAR releases statistics on state-by-state existing-home sales and metropolitan area median home prices each quarter.
</em>Ok, S&P Case/Shiller shows OC declining, OFHEO shows OC declining, and CAR shows OC declining. Mmm... looks like if you can get a conforming loan, then you need another 5% down. Ouch!
<em>When a property is located in an area identified as declining, Fannie Mae will now require the lender to offer financing at LTV and CLTV ratios that are five percentage points below the maximum ratios allowed for the selected mortgage product. For example, when the highest LTV allowed for a particular mortgage product is 100 percent, maximum financing would be 95 percent if the subject property is located in an area identified as declining. (When the mortgage is subject to subordinate financing, the CLTV ratio for all outstanding mortgages is used for this purpose).
Fannie Mae strongly encourages lenders to use supplemental sources and tools to independently assess current housing trends, unless the appraisal indicates that the subject property is located within a declining market. When the appraisal notes that the subject property is in a declining market, the maximum financing policy must be applied. When the appraisal does not indicate that the subject property is located within a declining market, Fannie Mae strongly urges lenders to implement processes and apply supplemental sources and tools to validate current housing trends and not rely solely on the information reflected in the appraisal. There are several services available that can be used by lenders and appraisers to assess current housing trends, including:
S&P/Case-Shiller® Home Price Indices. These indices rely on purchase price and related information obtained from county assessor and recorder offices.
Office of Federal Housing Enterprise Oversight (OFHEO) Index. For indications of market decline, lenders should use the index based on purchase loan data. Purchase-only indexes at the state level can be found at www.ofheo.gov/download.asp.
National Association of REALTORS® (NAR) statistics on changes in median prices. NAR releases statistics on state-by-state existing-home sales and metropolitan area median home prices each quarter.
</em>Ok, S&P Case/Shiller shows OC declining, OFHEO shows OC declining, and CAR shows OC declining. Mmm... looks like if you can get a conforming loan, then you need another 5% down. Ouch!
