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Bruce McCoy
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Is the sound of concrete cracking. Ronald Reagan made this statement after he was elected governor of California in 1966, and was referring to his pledge about state income taxes. We are starting to hear the same cracking noises from Fannie & Freddie regarding financing for investor purchases. Last year, during the beginning of this fiasco, FNMA and FHLMC (Freddie and Fannie) decided to limit to 4 properties that they would finance for any one person. Their reason was to limit the exposure if (and when) an owner defaulted. They also had questions because of previous underwriting guidelines as to the quality of the loans they already had made. Their feet were set in concrete over this rule.
Now they have realized that in order to sell off the foreclosed properties, they will need to allow investors back into the game. They have released their intent to increase the number of financed properties to 10 from 4. Of course, it would be too easy to for them to release the requirements at the same time. Those are due the first part of March. There are many more changes that have been announced, but again with no guidelines. I hope that I will have news that is more “concrete” next month!
I am certain that these new programs will also come with extremely strict guidelines; but, after all, when concrete cracks it starts very small.
Fixed Interest rates for conforming loans under $417,000 as of 2/23/09 (a.m.) are:
(rates quoted are at 1 point, for loans between $417,000 and $625,500 add another point)
30 year fixed: 4.875% (APR 5.031%) payments are $2,20680/mo.
15 year fixed: 4.50% (APR 4.77%) payments are $3,190.02/mo.