What does Fannie Mae have to say?

So, here's what I meant when I said that what Fannie Mae says makes a difference in the market. Last summer Fannie Mae announced that she wouldn't be buying any more sub-prime loans (smart move on their part), and that's what kicked off what has become known as the "sub-prime mortgage crisis." Remember what I said about how banks need to sell their loans to stay liquid? Well, if Fannie Mae won't buy your loans, you probably can't get anyone else to buy them either.

But, she's made an announcement this week about down payment assistance programs and their rules for buying loans on homes in neighborhoods where prices have declined. This is from their website, www.fanniemae.com:

Fannie Mae Announces Single National Down Payment Policy;
Replaces Policy Regarding Markets Where Home Prices are Declining

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today 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 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter^® (DU^®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

"As another part of our 'Keys to Recovery^TM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

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," Sullivan added. "At the same time, we believe that equity matters, especially in this market. Down payments are a critical success factor in homeownership -- and responsible lending is good business."

Since the housing correction began, Fannie Mae has expanded its mortgage guaranty business to serve the market's urgent need for stability, liquidity and affordability. The company also undertook steps to help protect borrowers, manage the increased credit risk in the market, and fortify the company's capital position. Among these steps, the company has continued to assess and establish new pricing, eligibility and underwriting criteria for its business that more accurately reflect the current risks in the housing market and guard against the potential for foreclosure. These changes have been incorporated into DU and have included adjustments to credit risk assessment, loan-to-value ratios and down payment requirements, among other factors.

Among the changes in response to market conditions, in December 2007 Fannie Mae adopted a "Maximum Financing in Declining Markets Policy" that restricted the loan-to-value ratios on properties in markets where home prices are declining, essentially requiring higher down payments in these markets. The new single national down payment policy announced today will supersede that policy.

Fannie Mae Senior Vice President Jeff Hayward stressed the company's commitment to special affordable lending programs to support homeownership for families of modest means. "We are stepping up to provide more liquidity and affordability to some of the most distressed communities while also seeking at least a 3 percent down payment investment through our Desktop Underwriter system from borrowers to help ensure their success."

Fannie Mae will continue to provide support for homebuyers that need down payment assistance, and will continue to allow loans with Community Seconds^® up to a maximum 105 percent combined loan-to-value ratio. Community Seconds allow a borrower to obtain a second-lien mortgage to help cover down payment and closing costs, with funding typically provided by a state or local housing agency; an employer; or a nonprofit organization. Fannie Mae also offers MyCommunityMortgage^® and Flex mortgage products, which permit down payment assistance programs in the form of gifts and grants.

"We recognize that down payment assistance programs remain a viable tool for borrowers who can afford a mortgage long term, but might need a little help getting started," Sullivan said.

As part of its "Keys to Recovery" initiative, Fannie Mae is expanding its partnership with the National Council of State Housing Agencies. The company will provide up to $10 billion in financing to help Housing Finance Authorities (HFA) serve first-time homebuyers of modest means. In some cases, Fannie Mae will purchase HFA mortgages that have greater than 97 percent loan-to-value ratios.

The first "Keys to Recovery" initiative that Fannie Mae announced on May 6, 2008 also includes: streamlined refinancing for Fannie Mae borrowers whose mortgage balances exceed the value of their homes; improved pricing for jumbo-conforming mortgages to help borrowers in high-cost areas; and a neighborhood stabilization initiative with the Center for Community Self-Help for targeted areas with high home foreclosures.

Who is Fannie Mae?

From their website - www.fanniemae.com:

Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America's housing market. Our job is to help those who house America.

Most of that is pretty clear. What might not be clear is the term, "secondary mortgage market." Here's what that means. When banks and mortgage companies make loans, they usually sell them to someone in the secondary mortgage market. When we bought our first home we used Sunshine Mortgage, but within a a couple of weeks we got a letter from citi-bank saying that they had bought out mortgage. Nothing about the mortgage terms and conditions changed, just who we sent the check to.

Why do we need a secondary mortgage market? So banks and mortgage companies can stay liquid. Here's an example. Let's say that Sunshine Mortgage has 10 million dollars to lend out on Monday morning. Every day that week they make 2 loans for $500,000. At the end of the week, they are out of money. They will be getting monthly payments on all of those loans, but it will be months before they can make any more mortgage loans.

But, because of the secondary mortgage market, banks can sell their loans and have cash to make new ones. Why am I telling you about Fannie Mae? Because I want you to be well educated real estate shoppers, and because what she says has a big impact on the market. I'll explain more later...

How should I choose my real estate agent?

I have some suggestions. Obviously you want someone who knows your local market well, who is punctual, responsible, connected to other agents, and intelligent. I'm assuming that you already know that. Here are some other things to look for:

1. Would you like to have a cup of coffee with this person? If the answer is "no," keep looking. You aren't actually going to have a cup of coffee with them, probably, but you are going to spend some time together. There will be a lot of time in the car, if you're buying. But in general if you don't have a good fit with your agent's personality, you'll dread hearing from him or her, and you'll avoid calling as well. Communication is important, so go with someone you don't mind having a chat with.

2. Would you let this person house-sit/pet-sit for you? This goes back to the responsibility thing. Your agent, if you are selling a home, is going to have keys to your house, and access to lots of information about you. If you're buying, your agent will eventually be responsible for a very large check that you've signed. If you wouldn't let them house sit for you, trusting them to lock the doors, feed your cat, and get the mail everyday, you shouldn't hire them as your agent.

3. Do you agree with this person's sense of style? Everyone has a different way of looking at the world and at themselves. I like diversity, but in real estate relationships I prefer a good match. If you are thinking about hiring an agent who's sense of style doesn't suit you, you might find that he doesn't show you houses that suit you either. Or if you're selling your home, the suggestions that she makes to get your home ready to sell might be intolerable. On the other hand, if you know that you have bad taste (you know who you are) try to find an agent who's taste you respect.

Where should I buy ink cartridges?

Cartridge World. There's one at the Emory Commons shopping center. It's a good place to buy your ink cartridges for two reasons.

1. It's cheaper. The first time you buy an ink cartridge from them you'll pay pretty much what you would pay at Office Depot or Target. But when you bring that cartridge back and they refill it for you (takes less than 3 minutes) it's about half that price.

2. It's recycling. Most ink cartridges now have a computer chip on them that helps your computer keep up with how much ink you have left. That's how it knows when to send you incessant messages to refill soon...but I digress... anyway, those chips don't need to go in the garbage or the landfill because they contain toxins that don't need to make their way into the earth. So, not only does it keep the cartridge itself from taking up space in the landfill, it help prevent contamination as well.

Good work, Cartridge World!

How should I behave in a crosswalk?

Here's a free tip - when driving through downtown Decatur, particular by Starbucks, you should stop for pedestrians in the crosswalk. The Decatur police are getting serious about it, so watch yourself. They'll also pull you over for not wearing a seatbelt. And by "pull you over" I mean that they will blow their very loud wistle at you, and everyone will stare. I'm a habitual seatbelt wear-er, and I am often a pedestrian so I like to stop for them as well. But, the rest of you folks should watch it.

And, while I'm on the subject of pedestrians. Please cross at crosswalks. And, if you're at an intersection with a light, please don't go when the people in the turn lane get their green arrow. You'll get your turn in about 3o seconds, but by then it will be too late for the people in the turn lane to go. I'm talking to those of you who are crossing between Atlanta Bread Company and Rue De Leon at Church Street. Yes. You. Wait for the little walking man, please.

What's up?

I've been busy on a couple of fronts. There have been three contract negotiations going on. I went to Birmingham for one night for a concert at BSC. Working on business plans. Pitching in a little as Aunt Janice. And then, of course, there is still laundry to do. So, nothing so exciting that I have a good excuse for not blogging, but that's about it.

I do have to brag on Andy Yates. My tech support is amazing. Check out the website he created for a new listing: www.janiceyates.com/treehouse

He's amazing. Granted, it's an amazing house so that helps. But, I'm a lucky gal.

Here's a funny story...to me. After I do an open house or a caravan I try to get by my brother's house to give my nephew the balloons. He's always happy about that. The last time I did it was the Sunday of the Inman Park Festival and it also happened to be raining. Sully, who is 3, wanted the balloons, but he didn't want to put on his shoes or his raincoat, so I picked him up and we ran in the sprinkling rain out to the car to get the balloons.

So on Wednesday I went by to help out because my brother had to work late. After I'd been there for about 10 minutes Sully said, "Did you bring any balloons?"
I replied, "No, buddy, I'm sorry. I only have balloons on Sundays, and sometimes on Tuesdays."
he continued, "And when it's raining."

How cute is that?