Friday, May 16, 2008

Fannie Mae will treat Logan Differently

I usually don’t send out economic news at this time of week, but I thought I would make this exception as I felt this was very pertinent news. According to this commentary, Fannie Mae will not put every market in the country into the same box, but will review each sale on it’s own merit. This is good for Utah and more specifically Cache Valley! As noted, high FICO scores will weigh more into each decision.

Brad White
Northern Utah Mortgage and Loan
Office (435)752-7115
Fax (877)752-7116

Good Morning,
Fannie Mae announced a new, national policy on down payment requirements for conventional,
conforming mortgages the company will purchase or guarantee. Starting June 1, 2008, Fannie
Mae will accept up to 97% LTV ratios for conventional, conforming mortgages processed through
DU, and 95% LTV ratios for loans underwritten outside of DU, in all geographic locations in the
United States. “The new national down payment requirements of 3 or 5 percent will apply to loans
for purchase of single-family, primary residences. Down payment requirements will vary for other
occupancy, property and transaction types. The company will implement systems and operational
changes over the summer to accommodate the new national policy. ‘We are able to adopt this
new, national down payment requirement, even in markets where home prices are declining,
because our new automated underwriting risk assessment model DU Version 7.0 will limit risk
layering and assess each loan more precisely.””
However, most mortgage insurance companies current guidelines will only accept an LTV higher
than 95% with a 700+ Mid Score.
Consumer sentiment has fallen to 59.5 this month, it's lowest level in 28 years. This is great
news for mortgage prices. Single Family housing starts fell 1.7%. Jobless Claims continue high,
U.S. Industrial Production (factories, mines, and utilities) was -0.7%, twice as weak as anticipated
by economists, and capacity utilization, which measures the proportion of plants in use, fell to
79.7 percent, the lowest since September 2005. Lastly yesterday we had the Philadelphia Fed
Index come out at -15.6 in May, better than forecast, from -24.9 in April. (Readings less than zero
signal contraction.)

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