Part 2, Fannie Mae and Me
Um, let’s back up a short step and review a “short sale”....And “walk-aways”....
A short sale is defined by the sale of a property for less than the loan, or note, amount. Simple. The lender agrees to support the sale based on several factors. These include Seller hardship, condition of property, and many others. “I’d like to make certain I have some choice in how the property is sold,” (and what fees the lender tries to stick me with) is what we hear most often.
A walk away is an owner of title who decides to simply walk away from their property. Typically lenders move to foreclose upon these folks, if for no other reason than to take control of the property in order to maintain the asset. The lender wants to maintain the value of the property to support the note.
A strategic walk away is defined as an owner who leaves the property based on factors other than hardship. “This place isn’t worth what I’m paying for it,” might be heard as they start the car.
Lenders would much prefer the property be sold via short sale; the property is more likely kept in preferable condition, as people are still living in the home.
Most importantly, the lender knows it’s less expensive to sell via through a short sale.
Now, the not-so-good news.
Fannie Mae is getting tougher on debt-to-income ratios, or the amount of a borrower’s gross monthly income that goes toward paying off all debts. The maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines.
The agency is also taking a harder look at payment histories on revolving debt. In the past, if a borrower missed a monthly payment, Fannie Mae ignored it, or required that lenders add a few percentage points to the total balance when calculating the debt-to-income ratio. Now, buyers who have missed a payment will have 5 percent of the total balance added to their ratios.
Susan A. Kreyer, the president of the New York Association of Mortgage Brokers, said that buyers who had bought big-ticket items through financing with delayed payments would also be affected.
In addition, Fannie Mae is scrutinizing people who are at the end of their mortgages, with 10 or fewer payments left. It will now count those remaining balances in the debt-to-income ratios — another departure. Mortgage experts say that older buyers near the end of their loans may now have a tougher time securing a loan for a second home.
OK, so far their change seem to make sense…now for the aspect of the new guidelines which should strongly encourage strategic walk-aways to list their homes with a Short Sale Specialist ….
Um, let’s back up a short step and review a “short sale”....And “walk-aways”....
A short sale is defined by the sale of a property for less than the loan, or note, amount. Simple. The lender agrees to support the sale based on several factors. These include Seller hardship, condition of property, and many others. “I’d like to make certain I have some choice in how the property is sold,” (and what fees the lender tries to stick me with) is what we hear most often.
A walk away is an owner of title who decides to simply walk away from their property. Typically lenders move to foreclose upon these folks, if for no other reason than to take control of the property in order to maintain the asset. The lender wants to maintain the value of the property to support the note.
A strategic walk away is defined as an owner who leaves the property based on factors other than hardship. “This place isn’t worth what I’m paying for it,” might be heard as they start the car.
Lenders would much prefer the property be sold via short sale; the property is more likely kept in preferable condition, as people are still living in the home.
Most importantly, the lender knows it’s less expensive to sell via through a short sale.
Now, the not-so-good news.
Fannie Mae is getting tougher on debt-to-income ratios, or the amount of a borrower’s gross monthly income that goes toward paying off all debts. The maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines.
The agency is also taking a harder look at payment histories on revolving debt. In the past, if a borrower missed a monthly payment, Fannie Mae ignored it, or required that lenders add a few percentage points to the total balance when calculating the debt-to-income ratio. Now, buyers who have missed a payment will have 5 percent of the total balance added to their ratios.
Susan A. Kreyer, the president of the New York Association of Mortgage Brokers, said that buyers who had bought big-ticket items through financing with delayed payments would also be affected.
In addition, Fannie Mae is scrutinizing people who are at the end of their mortgages, with 10 or fewer payments left. It will now count those remaining balances in the debt-to-income ratios — another departure. Mortgage experts say that older buyers near the end of their loans may now have a tougher time securing a loan for a second home.
OK, so far their change seem to make sense…now for the aspect of the new guidelines which should strongly encourage strategic walk-aways to list their homes with a Short Sale Specialist ….
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