RTT News reports:

“Fannie Mae has halted mortgage guarantees in condo buildings where fewer than 70% of the units have been sold compared to the earlier 51% benchmark. Additionally, loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity will be more harder to come by for developers and aspiring condo owners, WSJ said. “

What this means is that Fannie Mae won’t buy a lot of condo mortgages where developers are struggling to sell the units. Lenders can still choose to make the loan, but because the mortgage won’t be guaranteed by Fannie Mae, borrowers are likely to have a hard time finding a willing bank and getting competitive rates.

See Also:

Non-Conforming Bank Loans

FHA Mortgages

The easiest way to find out is to pick up a phone and call your lender. They should be able to look up your records and give you the necessary information. Some major lenders, such as Wells Fargo, give out this info via an automated hot line.

If that doesn’t work, you can contact Fannie Mae or Freddie Mac directly using the info found on the government’s Financial Stability website.

In some cases, your mortgage ownership information will show up on your credit report or on files at the the County Recorder’s office. But, it’s important to note that this data can be out-dated or unreliable.

For the few who who meet the requirements, the federal creative financing program can be a smart way to get a low interest rate.

photo credit: borrowed time | demi-brooke

See Also:

Creative Re-Financing: Obama’s New Foreclosure Plan

FHA Mortgage Basics

Basically, there are two groups of people the foreclosure plan is designed to help: homeowners who are unable to refinance and homeowners who are already underwater and cannot continue to make their monthly mortgage payments. Here’s what they’ll get:

Homeowners who are unable to refinance: Currently it’s very difficult to refinance a mortgage and practically impossible if the borrower has less than 20% equity. The foreclosure plan makes it possible for homeowners with little to no equity to refinance at today’s record low rates. The ability to refinance could save borrowers thousands of dollars a year. The White House gives this example:

Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300.

In order to be eligible for this program, homeowners must have mortgages insured by Fannie Mae or Freddie Mac (the majority of traditional loans fit this specification, but you’ll need to call your lender to make sure). Early info says that refinancing borrowers must be “creditworthy.” But, there are no specific details about where the benchmark will be set.

Homeowners who can’t make their payments: Borrowers who are already underwater are offered a federal loan modification program called the Homeowner Stability Initiative. Basically, the federal government agrees to work in tandem with lenders to lower borrowers’ monthly payments or even reduce the principle amount owed on the home. The loan modifications will be based on the borrower’s current income and ability to pay. Here’s the Stability Initiative could help a family:

“For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.”

The lower monthly payments will be available for a period of 5 years. During that time, participating homeowners who pay their mortgage bills on time will be eligible for a $1,000 loan credit each year.

Is Creative Re-Financing Right for You?

Not everyone is going to be eligible for Obama’s new plan. But, if you do qualify, I’d suggest signing up as soon as possible. The programs offer refinancing and loan modification deals that just aren’t available through any other means. Plus, the refinancing program seems to be aimed at homeowners who aren’t struggling, making it possible for you to lower your monthly mortgage bills without damaging your credit score.

Learn More

Want to learn more about the Homeowner Affordability and Sustainability Plan? I’ll be posting updated information as it becomes available. But, for now, here are a few good reads on the topic:

• The White House Blog and Official Statement explain the basics of the program, straight from the Capital.
• Take a look at the Washington Post for answers to basic questions about how Obama’s housing plan will work.
• The New York Times offers an easy-to-understand visual representation of who qualifies for which programs in the new housing plan.
• Morgan’s Blown Mortgage Blog does a helpful job of detailing the specifics of each program and explaining why he believes the Homeowner Affordability and Stability Plan just isn’t going to cut it.
• Finally, the San Francisco Chronicle explores some of the mixed reviews homeowners and interest groups are having towards the announcement of the housing plan.

Check back for more information. If the last few months have taught us anything, it’s that the housing market and associated legislation can change in the blink of an eye.

photo credit: aflcio2008

Fannie Mae and Freddie Mac Conforming Loan Standards

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSE) that set the lending standards used by banks. They set terms such as limits on the maximum loan amount, down payment requirements, credit score requirements, and more. When banks make loans that meet these standards, they are called “conforming loans.” Banks are always able to sell conforming loans to other lenders or to Fannie Mae / Freddie Mac. Lenders view these loans as safe because they all meet the same lending standards.

If you cannot meet the conforming lending standards (i.e. your needed loan exceeds the limit or you have a poor credit score), a bank may still be willing to give you a mortgage. Instead of using the standards set by the GSEs, the bank will use its own requirements. The bank will not be able to sell your non-conforming mortgage to Fannie Mae or Freddie Mac. It may also have a more difficult time selling the mortgage to other lenders. Because of the perceived risk of default and the difficulty of selling your loan on the secondary market, the bank will give you a higher interest rate. Read more…