DISQUS

Larry Compton · 9 months ago

I for one am glad to hear this news from Fannie. It's about time. The tightening that has taken place has removed good quality borrowers from the market. Like with most problems, the correction swung the pendulum too far. Too much emphasis has been placed on credit scores, which I believe are not a true indicator of a borrowers willingness to repay a loan. It was created for untrained individuals to grant loan approvals in absence of underwriters that understand their job. I do not think these changes will get us back to the "fog a mirror" approvals

SteveC · 9 months ago

They finally figured it out. The only way to get the real estate market revived is to return to the credit standards that caused the collapse. Now we will have a secondary collapse and the nation's economy will remain stagnant and home prices will fall even further. We need accountants in government, not lawyers.

Fielding Mellish · 9 months ago

This is a joke - even if FNMA doesn know it's a joke. Eliminating the need for appraisals on FNMA-held loans will only work if the borrower calls up the current servicer, they mutually determine that it's a Fannie loan (not Freddie or securitized through another channel) and the current servicer gives the borrower whatever the F rate they deem to give them (while making massive profit re-selling the new loan). Any borrower calling up a different lender (especially if they've waited 3 weks for a call-back from their current servicer) will need to get a new loan. As will anyone hoping to consolidate 2 mortgages or get a little cash-out. And if this appraisal-loosening is relevant to that borrower, it probably means they have an LTV > 80, which means they'd need a simultaneous 2nd (almost wholly unavailable) or MI. Well guess what - MI companies aren't insuring new loans without appraisals, nor are they insuring loans without full income documentation. In many cases, they're not insuring loans with DTI's > 41 or 45 (DU/LP approvals notwithstanding). This BS proposal will have even less effect than Fannie's getting rid of the "declining mkts" designation in DU. The MI companies still have their own declining mkts zip code lists (essentially everywhere except South Dakota) and the appraisers still call a declining mkt declining mkt.

What's even funnier about this BS proposal is that I'll bet that FNMA execs think they're helping. What a total joke.

Susan · 9 months ago

This is good for the banks..so long as they keep brokers out of the equation...these changes will again entice those that failed their duty to provide the borrower with the loan best suited will try to again bring fraud into the equation...

Fannie also needs to broaded the loan amount to consider the larger loan balance for higher cost cities..

The best thing for the rest of the big banks is to leave wholesale behind...

TallTreesClub · 9 months ago

The Keynesian fools want banks to lend. For what? What is it we need more of? Houses? Condos? Pizza Huts? Home Depots? Lowes? Nail salons? Strip Malls? Walmarts? And if by some miracle banks did lend that money and new stores were built, who is there to buy? What would happen then? Is the amount of money that can be thrown at problem unlimited? What about the problems that will create? Can problems be postponed forever? Is there a Keynesian on the planet who can think more than one second ahead ?

Tom Lawler · 9 months ago

The program you describe is only available for loans that Fannie already owns and has the credit risk on. How does making it easier for a borrower with a , say, 7.5% mortgage refinance (with no cash out) into a 5.25% mortgage "make the entire system more susceptible to weakness"? Without this refinance opportunity, the borrower is more likely to default; Fannie already "owns" the credit risk; so what is your point? It seems nonsensical.

Fielding Mellish · 9 months ago

To Tom Lawler,

The reason loosening up standards weakens the system (even as it allows a few unqualified to get lower rate loans) is that THANKFULLY we had recently switched from giving loans to anyone with a pulse to giving loans only to people who can pay the loan BACK. The issue is not merely the short-term possibility of making life a little easier for a few people on the edge; it is about whether we want to continue/reinforce/return to loosey-goosey lending in order to reinflate the biggest credit bubble in the history of the world. We spent much of the last two decades implicitly teaching people that it didn't matter if they saved zero money. They could still get a low-no down payment mortgage loan. It didn't matter if they didn't maintain a good credit history, they could still get a low rate mortgage loan. It didn't matter if they were subsidizing a lifestyle they couldn't afford with serial cash-out refinances; there was always another opportunity to suck more paper "equity" of of their house, and home values only go up. Where the hell does it end? When the hell does it end? Let me remind you, Tom, that we all now own Fannie & Freddie. We can't only worry about returning the housing market to "normal" (whatever the hell THAT means). We need to insure going forward that the new NORMAL is sustainable, because the way it had been done was demonstrably NOT sustainable.

If you think these sad sacks with their 7.5% rates need a 5% mortgage, then YOU lend them YOUR money. I know that Fannie is (and therefore I am) already on the hook for the old 7.5% loan, but I'd rather recover what we could through foreclosure than lend more money and increase our future risk.

Tom Lawler · 9 months ago

Of course, the proposal for Fannie and Freddie to allow borrowers to refi existing loans held by them does NOT involve lending them more money. That, I agree, would be nuts. Instead, it would allow them to lower their current interest rate -- in your example, from 7.5% to 5%. No one that I know of has proposed lending MORE money to folks in trouble!!!!!

el · 9 months ago

That's the right way to go if the loosen guidelines, you need to cure the bad with the bad in order to circulate the blood from the main stream otherwise we are going to get stuck for many years in order for our country will see the light again, so long they have a home with equity if they can refinace let them refinance with proper income, people are loosing their jobs, employers are taking the heath and cutting hours and those hours and laid off reflects in our economy, burden to the monetary system, many people don't see this was coming, they used to said, it's only the financing, homes, nothing to do with my work, I heard this so many times, I told them wait until get to you, you will feel the pain, the pain that many employees and employers felt and still feeling the pain, until this stop, and my opinion is to stop the bleeding Right Now, do what it's necessary to stop it right now before more and more people will end up in the street! with no jobs no incomes and no more American Dream!, at this time the American dream is gone for many families., Put people to work get the jobs back to United States of America, Put Money in the American People, We're suffering like no other times, Need to get the housing market back, if people are losing their home so long they can pay let them keep their homes, cut the principal to the current value, have the banks cut their shares too, they make a big mistake they need to lose too, most of the items, food and services are inflated, bring everything back to the current cost of living, people use credit cards to pay for food, gas, neccesities, they don't make enought money to keep up with the living standars of today values, if they need a Car let them have the car so long they have a Job and can pay, they need the car to go to work and keep working don't look the credit any more, due to the situation, because they lost their jobs homes, etc. BAd with BAd Cures the faulty System for Now, but make sure people are working, have insentives for employers to Hire people left and right put people to work, let the money rolling to the system again, some how the money got stuck in the system, loosing credit guidelines will work and banks were scare to lend money once they received it, because they don't know which way to go because shareholders are ready to scream, we lost billions and billions of dollars already, if Fannie don't loosen guidelines the foreclosures will continue and Fannie knows that the only way for know it's the Bad way loosen credit guidelines and not just for Fannie it's for everyone all credit agencies to wake up and smell the flow of money otherwise you guys will keep losing more, more money, because people are scare to lose their jobs, people are not buying big items! just the main necessities, food, gas, rent, once people start buying it's good for our economy, United States of America is BACK STRONG!
like many families been working for our entire lives suddenly we lost our jobs!.what we're going to do?..if you just make enought money pay check to pay check every week! once the flow of money stops?.. looking for another Job? but it might not be the same pay or some job because we need to survive, we have kids to feed, bills to pay! this is BAD, We need Jobs! Still many good brokers around not everyone is bad, it's like everyone else on each department or duties in our entire system, there are some good and bad representatives, congressman, or any other entity.

morganb · 9 months ago

Sorry to jump in so late here but my problem with the changes is that two-fold: 1)it is just one step closer to the "appraisal-free refi" where the government just underwrites loans w/out knowing the value of the asset and 2) it sets the precedent that American credit moving forward will be substandard credit (we're all subprime now) which will in the long run degrade the quality of our economy, the in-flow of capital and the interest rates and returns associated with our debt. The public is hurt when America's credit is seen as a higher risk (see: now) and by undermining credit quality in the long term simply to fix a binge in the short-term is poor policy.

I would expand more and you can go ahead and punch holes in this but I'm traveling and a bit out of pocket so it's the best I can do for now.

Andrew · 9 months ago

I was recently declined a refi by Fannie Mae because one person owns more than 10% of the units in my condo building, its a 12 unit complex.

ChaseReject · 8 months ago

No one is getting it right.....I'll share with you my story and then you decide if the banks are loosening their credit....I have same job for six years and same industry for 12 years...I make $105k a year salary plus additional $25k working as a CPA from home. My wife makes about $50k but she's had the job for less than a year. I own my primary free and clear, and have two investment properties that even though they are rented I have to put in about $200 for each monthly, my two cars are paid off and we have no credit card debt and have a credit score that is usually high 700s and low 800s. Cash balances of about $20k, and about $100k in IRAs. I also have my realtor's license but have never made any money off of it. I find a house for $260k and tell CHASE I'll put down 20% from the zero balance HELOC I have on my primary. They prequalify me and then start the underwriting. After close to 40 days they come back and deny me....Why you ask? They won't include my CPA income bc its too unreliable..never mind that my small business generates more income every year since I started, they won't count my wife's income bc she's been at the job less than a year. Financially I still qualify since the PITI would only be about $1,700 monthly on the new $208k loan @ 4.75%. Final disqualification...they are not financing REALTORS who purchased Foreclosed properties and represent themselves. CAN YOU IMAGINE? And that was it..my experience with Chase. I was shocked...who in the world will they lend money to.....apparently not me...the guy who paid off all his debts at the age of 32 and has enough income to afford a mortgage payment of $1,700 a month.....ABSURD....now I am applying with Wells Fargo....they own the property but they too have questioned everything except the realtor piece.....I should know tomorrow......GOOD LUCK everyone!!!!

NVA · 6 months ago

I am not surprised to hear that Fannie has loosened their credit standards - they may as well, since they are now owned (in all the ways that matter most) by the government-which is the same agency (company) that owns FHA.

FHA has brought out many different types of programs to suit qualification standards as they exist today, what possible reason should Fannie have to exclude borrowers that FHA does not exclude when they are basically one in the same anyway?
Why even separate the two?
Come to think of it, why even bother to have more than just a few banks in operation? Why not just have one?
Why not just have BOA and forget the rest?
It just makes sense. That way, they can charge anything they want, and we have to pay it.
(Don't forget, It works for us...because we are the shareholders- we make money on the deal).
Yes- we should be grateful for these wonders of policy making.
(Does anyone remember when Nationsbank came into the picture? They started buying up the "little" banks... they are now BOA).