Fannie is doing 3% down loans again?!

Fannie Mae announced today that they will rescind the "declining market" policy on the loans that they purchase! It appears that this will lower the down payment back to 3% on loans up to $417K and 5% on loans up to $729K. The attached article outlines the new policy, and we will forward you more details surrounding the actual loan amounts that are not included in the article. Since the "high balance conforming" loans require manual underwriting, we are under the impression that this means loan amounts up to $729,500 but the details are uncertain at this point. Make special note that the article does specify Single Family Residence, so condo's may require a greater down payment. We will forward additional news as it becomes available.


News Release

May 16, 2008

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 RecoveryTM' 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.




Nader Chahine
Branch Manager
phone: (310) 372-8800
fax: (310) 372-6545
www.manhattanhomefinance.com
3601 Aviation Blvd #3480
Manhattan Beach CA 90266

Simon says: "Foreclosures have tripled, isn't this incredible!"

This piece was published in the Santa Daily Press.

Simon says: "Foreclosures have tripled, isn't this incredible!"


Pretty darn exciting-- isn't it? No, not really, not at all. In 2007 Brentwood had six residential property foreclosures. Santa Monica 90402 had zero foreclosures. Santa Monica 90403 had three, 90404 had five, 90405 had eight and 90401 had one.


In other Westside neighborhoods such as Playa Del Rey, there were four foreclosures in 2007. In Marina Del Rey there were seven and in Venice there were three. The neighborhoods of Westwood and Mar Vista/Palms were a little less fortunate. Westwood had fourteen foreclosures and Mar Vista had seventeen. Beverly Hills has remained strong with only four foreclosures.



Never before, when writing this column, have I felt so confident that my point was made within the first two paragraphs. However, it will probably be a little more interesting to everyone if I elaborate a little bit. And this is what I am going to do, with some of my own personal opinions thrown in.



Now, one could argue that this is only the beginning of the real estate "collapse." Truthfully, one never knows what is to come. However, I like to note that the less desirable parts of our county have already been experiencing significant declines in values for as long as three years now.



Additionally, if more than another 5% drop in values occurs, it will become effectively less expensive to own than it will be to rent. This applies mainly to those neighborhoods, like ours, where the residents are in the 30-45% tax brackets. This includes the majority of Westside residents with college degrees who are of working age. Santa Monica for example is always the last to drop and the first to rebound from a market slowdown.



I would like to say that it is somewhat upsetting to hear people talking about foreclosures as if they are rampant on the Westside. They evidently are not. In the past year, the most difficult part of being a Realtor in this market isn't how challenging business has been. The real drag these days is the unrelenting negativity of the media and some people.



I understand how people feel about all this. I also thought the excesses of the prior market boom were obnoxious and at times ridiculous. That is why now, as it was then, we all need to be able to approach what is happening in a grounded and well thought out way.



At the end of the day, we have to own or we have to rent. If owning isn’t much more than renting, many people will choose to own. It’s more pleasurable for most people to own and it has tax advantages. Renting involves less responsibility and provides greater flexibility.



I am involved in a half dozen conversations a week with prospective buyers who are under the impression that the Westside of Los Angeles neigborhoods are down about 20% and that foreclosures are everywhere. There have been statistics published that property values are down as much as 30% in Los Angeles County. This is true, but only in certain limited geographical locations. Places that most Westside residents have never been to and would need a GPS to find and would certainly find highly undesirable to inhabit. Remember, this is a big sprawling city.



The other day I was chatting with an agent friend of mine while he was doing "floor time." Floor time is when an agent takes random calls as they come into a real estate office. An annoyingly common call for "foreclosure properties" came in to our Brentwood office. The woman wanted a list of foreclosure properties. He told her to go on the internet and call some banks and that we didn't work directly with a lot of foreclosures. It's pretty silly to call a Brentwood real estate office looking for a "list" of foreclosures when there have only been six in the past year.

Unless a property being in foreclosure is your prime requirement when buying a property, it’s a poor business decision to look for foreclosures only. Remember that foreclosures are thrown into the market like every other property, subject to the competition like any old home on any old street.

The advantage with foreclosures is that the banks are the sellers and are often involved at an arms length. Additionally, some of the brokers involved in listing foreclosures for sale are out of the area, and have little knowledge and or concern for surrounding property values. Presentation can also be lacking. It’s not uncommon for a home in foreclosure to be filthy, broken down, unkept and littered with trash. This is not a good selling point for prospective buyers.

(Pick up a copy of this paper in two weeks for the second part to this article titled: “Short Sales.”)

Simon Salloom is a local Santa Monica and Brentwood based Realtor with Coldwell Banker. Comment on this and other articles at his web-site: WestsideSimon.com and he can be reached at: 310-749-8686

Santa Monica and Brentwood Condo Statistics last 8 Months

Click here to view as a spreadsheet (it's much more readable)

Brentwood Brentwood Santa Monica Santa Monica Total Total
Sales Days on Sales Days on Sales Days on
Volume Market Volume Market Volume Market
January-07 10,208,327 83 29,776,500 62 39,984,827 73
February-07 19,331,000 79 23,240,250 70 42,571,250 75
March-07 19,825,500 78 42,784,000 55 62,609,500 67
April-07 21,234,862 60 30,820,005 60 52,054,867 60
May-07 23,866,506 62 53,232,200 62 77,098,706 62
June-07 18,020,000 53 30,590,500 55 48,610,500 54
July-07 23,195,024 42 28,986,500 43 52,181,524 43
August-07 15,774,250 31 30,717,300 54 46,491,550 43
September-07 4,356,000 34 27,210,125 67 31,566,125 51
October-07 7,910,000 62 21,734,090 41 29,644,090 52
November-07 9,851,000 71 26,142,500 61 35,993,500 66
December-07 3,067,500 78 15,091,000 56 18,158,500 67
January-08 5,293,500 78 14,838,333 56 20,131,833 67
February-08 9,893,000 65 17,520,750 97 27,413,750 81
March-08 10,233,500 71 12,104,250 97 22,337,750 84
April-08 10,372,250 72 27,827,141 93 38,199,391 83

Active Listings 82,311,456 143,153,584 225,465,040

Monthly Absorbtion 13,277,014 27,038,465 40,315,479

Months of Inventory 6.20 5.29 5.59

Bond and home loan rates showed improvement with the early part of the week.

Bond and home loan rates showed improvement with the early part of the week.

The Fed Announcement on Wednesday cut the Fed Funds rate by .25%
Typically bonds and home rate react poorly to Fed cuts due to inflation concerns but the Fed's statement hinted that the rate cutting cycle may be nearing an end and Bond and loan rate reacted favorably.
Thursday - The Core Personal Consumption Index (CPE) showed core inflation at 2.1% and just a whisker above the desired 1-2% for inflation. No market movement resulted from this report.
Friday - The Jobs report brought word of 20,000 lost jobs in April and better than the expected 75,000 lost jobs. This caused bond and home rate to worsen dramatically but after the details of the report were released with worsening prior months revisions, bond and home rates improved.
Overall, after another volatile week and when the dust settled, we saw slightly better rates.

Mortgage Market View

Don't over pay... File a property tax appeal

The National Taxpayers Union estimated 60% of home values were assessed too high resulting in higher taxes.
Contact your local tax assessors office and ask for someone in the reassessment area to inquire of starting an appeal.
Ask for a copy of your property card and review all information for accuracy.
About 33% of property tax appeals succeed.


Here is the most recent newsletter, simply click on the link below to view. Please feel free to forward this email to your clients that are interested in economic new that impacts interest rates.

http://www.mmgweekly.com/w/index.html?SID=881c6efa917cff1c97a74e03e15f43e8



Nader Chahine
Branch Manager
phone: (310) 372-8800
fax: (310) 372-6545
www.manhattanhomefinance.com
3601 Aviation Blvd #3480
Manhattan Beach CA 90266

Mortgage news

"The Jobs Report was released today, and reflected a decrease of 80,000 jobs for the month of March. This was positive news for interest rates, and the 30-year conforming dipped to 5.875%, and 5yr Jumbo to 6.25%."

My opinion is that this is bad news overall. What got us into this mess is ignoring the fundamental values of economic success. Manipulating the economy by reducing interest rates is an artificial stimulus, which will eventually catch up to us and we will have to face the consequences.

At the end of the day, less jobs means less output, less output means less growth and consumption and less growth and consumption means less wealth. Cheap money has created an environment where investors are accepting more risk for less reward. An example is the way people have been buying investment properties with 3-5% cap rates.

If one thing goes wrong with any of these properties, and something always does, the investor is going to make zero or negative on their money. It's easier to invest in a bond and a lot less hassle. The other problem with cheap money is that it feels like, and I am just a layman, that our country is just printing the stuff, with no more regard for what they are doing than an office worker at a xerox machine. We need more money, ok, let's photocopy another 10 billion. And, perhaps the rest of the world has caught on being that our dollar is historically weak.

Simon says: "Mold and Water Intrusion, Oh My!"

Simon says: "Mold and Water Intrusion, Oh My!"

There has been a lot of rain recently. If you drive around the streets of our fair city, you will likely see a lot of water leak detection, repair and mold remediation trucks out there. Beware! Many of these "contractors" who deal with mold are dubious at best. Recently I had a "remediator" who wanted to charge a client $350 a day rental for an air scrubber. My, very reputable guy came in to do the job and charged only $25 a day rental for the same machine. This same dubious "remediator" wanted to charge $6,000 for the job. My client had used the man before and was convinced he was a legitimate professional. After meeting with two other contractors who were veritably legitimate and honest, we received bids for the same job at $1,500 and $2,000. Unfortunately, it is my experience that more of these mold pros are on the seedy side than on the legitimate side of things. So, please be aware and don't trust anyone. It is a relatively new industry and a lot of these people virtually "certify" themselves. It is the perfect profession for sleazy people who want to take advantage of the inexperienced.

Some people wonder why mold is such a seemingly "new" issue. This has to do with the use of drywall instead of plaster in walls. Drywall has a paper backing, which mold loves. Old fashioned, or higher-end plastered walls don't have this vulnerability.

From what I've learned from mold professionals, very few of the homes with mold actually pose a health risk to the occupants. With the minimal amount of rain we experience in Southern California, the dry season, which appears to be almost the entire year, you can live in a home for years without ever being aware that mold is growing inside the walls. The threat to the integrity of a property from water intrusion and what may become a serious mold issue is really the problem. And these problems are fixed much more easily at their beginning.

To give you some insight into the process. When water intrusion is detected, a mold inspector or mold remediator should be called in. Unless it is a recent problem, there will be mold. An inspector simply tests for mold. Generally, they will drill a small hole in a wall, take an air sample and send it to a lab for analysis. If a severe enough mold case is detected, a remediator will come in to contain and clean all the mold away. Sometimes, if you are sure you have a problem, you can skip the inspection and just bring in the remediator. At the end of the remediation, to make sure it was successful, you will need to have an inspection and a sample sent to the lab. Different remediators have different success rates at coming up with a "clear," final inspection. Try to find one who has a good history with this, if you need help contact me and I'll give you some names.

Cleaning up all the mold is one thing, making sure it doesn't come back is another. There are leak detection specialists out there who are trained at finding out sources of water intrusion. Water is insidious and hard to track down. Sometimes, even the best leak detectors can't find the source.

If you are in escrow or will be soon, there are some things to consider. Sometimes a seller isn't aware of a mold and/or water intrusion problem, and therefore won't disclose it to a buyer. After you close escrow, you may not be aware of the problem until a severe rain happens. Sometimes, a seller will cover up the water issue and not tell the listing agent about it, and certainly not the buyers. The general physical inspectors, who are hired by almost all buyer's to inspect their prospective purchases, are not trained to detect these types of problems. Even the best of them, usually fail to do a moisture reading around windows and other seams in the construction. In fact, most do not even own a moisture reader. Additionally, there have been many instances when water intrusion was covered up or not noticed by a seller and/or missed by the general inspector only to show up a day, a month or a year after closing. Regardless of any of these factors, my policy is that if there is any question in your mind... do a mold inspection. A mold inspection will cost around $500-700.

You can also do a CLUE report for about $100, which is a search for any insurance claims on a property. The C.L.U.E. Report is more critical on a single family house than a condo. This is because insurance claims for water intrusion on a house can sometimes leave a new homeowner without the ability to gain insurance on the property, period. This risk is very rare in condos. Water intrusion almost always comes from the exterior of a condo building or from inside the walls. This leaves the majority of water intrusion in condos under the blanket insurance policy of the condominium complex. Since almost all condominium complexes have experienced water intrusion, the insurance companies would have very few clients if they took this same approach than condos.

It is important to note however that many times water intrusion is not reported to insurance companies, so the C.L.U.E. report is most of the time really about the properties insurability. Additionally, only the most foolish seller and/or agent would be unwise enough not to disclose something that was reported to an insurance company. However, if a property has been seriously plagued by these problems, then a dishonest seller may have a lot to gain by hoping a buyer will not find out about all of the claims.

Sometimes, the evidence of a water leak looks very insignificant on the surface compared to the $10-50,000 problem lurking underneath the drywall. As a buyer, do not fear that doing an inspection and discovering mold will put an end to your purchase. Once mold is discovered, the seller will have to remedy the issue or face the challenge of having to disclose it to all subsequent prospective buyers, who, like you, will want it repaired.

As a seller, having a mold inspection prior to the close of escrow, or preferably prior to the sale, will give you the ability to use your own contractors to fix the issue. If you wait for it to be discovered by a buyer, you could very well end up with less reputable mold companies, a hysterical buyer, and agents who don't really understand the problem. The risk of unnecessary stress and unnecessarily high financial costs isn't worth not paying the money for a pre-emptive mold inspection.

I have begun to think how strange it is that a seller is required to do a termite inspection prior to closing escrow but that a mold and water intrusion inspection isn't required. This doesn't make sense to me. Most of the time termites are discovered, it's a pretty simple inexpensive fix. Whereas mold and water intrusion repairs are far more troublesome and expensive.

Having mold doesn't always mean your health is threatened or that your property is going to fall to pieces. It doesn't mean your home is plagued by something sinister. It just means some water got inside and is taking long enough to evaporate that mold has time to grow. Anyways, I hope that this article helps people to better decide what is going to make sense for them.

To sum it up, get a mold inspection regardless of anything else. And, if you need to find reputable, honest people in this field, contact me. It's better to find the problem and fix it sooner rather than later.

Simon Salloom is a Realtor with Coldwell Banker. He specializes in Westside real estate. His web-site is www.WestsideSimon.com

Simon says: "Mold and Water Intrusion, Oh My!"

Simon says: "Mold and Water Intrusion, Oh My!"

There has been a lot of rain recently. If you drive around the streets of our fair city, you will likely see a lot of water leak detection, repair and mold remediation trucks out there. Beware! Many of these "contractors" who deal with mold are dubious at best. Recently I had a "remediator" who wanted to charge a client $350 a day rental for an air scrubber. My, very reputable guy came in to do the job and charged only $25 a day rental for the same machine. This same dubious "remediator" wanted to charge $6,000 for the job. My client had used the man before and was convinced he was a legitimate professional. After meeting with two other contractors who were veritably legitimate and honest, we received bids for the same job at $1,500 and $2,000. Unfortunately, it is my experience that more of these mold pros are on the seedy side than on the legitimate side of things. So, please be aware and don't trust anyone. It is a relatively new industry and a lot of these people virtually "certify" themselves. It is the perfect profession for sleazy people who want to take advantage of the inexperienced.

Some people wonder why mold is such a seemingly "new" issue. This has to do with the use of drywall instead of plaster in walls. Drywall has a paper backing, which mold loves. Old fashioned, or higher-end plastered walls don't have this vulnerability.

From what I've learned from mold professionals, very few of the homes with mold actually pose a health risk to the occupants. With the minimal amount of rain we experience in Southern California, the dry season, which appears to be almost the entire year, you can live in a home for years without ever being aware that mold is growing inside the walls. The threat to the integrity of a property from water intrusion and what may become a serious mold issue is really the problem. And these problems are fixed much more easily at their beginning.

To give you some insight into the process. When water intrusion is detected, a mold inspector or mold remediator should be called in. Unless it is a recent problem, there will be mold. An inspector simply tests for mold. Generally, they will drill a small hole in a wall, take an air sample and send it to a lab for analysis. If a severe enough mold case is detected, a remediator will come in to contain and clean all the mold away. Sometimes, if you are sure you have a problem, you can skip the inspection and just bring in the remediator. At the end of the remediation, to make sure it was successful, you will need to have an inspection and a sample sent to the lab. Different remediators have different success rates at coming up with a "clear," final inspection. Try to find one who has a good history with this, if you need help contact me and I'll give you some names.

Cleaning up all the mold is one thing, making sure it doesn't come back is another. There are leak detection specialists out there who are trained at finding out sources of water intrusion. Water is insidious and hard to track down. Sometimes, even the best leak detectors can't find the source.

If you are in escrow or will be soon, there are some things to consider. Sometimes a seller isn't aware of a mold and/or water intrusion problem, and therefore won't disclose it to a buyer. After you close escrow, you may not be aware of the problem until a severe rain happens. Sometimes, a seller will cover up the water issue and not tell the listing agent about it, and certainly not the buyers. The general physical inspectors, who are hired by almost all buyer's to inspect their prospective purchases, are not trained to detect these types of problems. Even the best of them, usually fail to do a moisture reading around windows and other seams in the construction. In fact, most do not even own a moisture reader. Additionally, there have been many instances when water intrusion was covered up or not noticed by a seller and/or missed by the general inspector only to show up a day, a month or a year after closing. Regardless of any of these factors, my policy is that if there is any question in your mind... do a mold inspection. A mold inspection will cost around $500-700.

You can also do a CLUE report for about $100, which is a search for any insurance claims on a property. The C.L.U.E. Report is more critical on a single family house than a condo. This is because insurance claims for water intrusion on a house can sometimes leave a new homeowner without the ability to gain insurance on the property, period. This risk is very rare in condos. Water intrusion almost always comes from the exterior of a condo building or from inside the walls. This leaves the majority of water intrusion in condos under the blanket insurance policy of the condominium complex. Since almost all condominium complexes have experienced water intrusion, the insurance companies would have very few clients if they took this same approach than condos.

It is important to note however that many times water intrusion is not reported to insurance companies, so the C.L.U.E. report is most of the time really about the properties insurability. Additionally, only the most foolish seller and/or agent would be unwise enough not to disclose something that was reported to an insurance company. However, if a property has been seriously plagued by these problems, then a dishonest seller may have a lot to gain by hoping a buyer will not find out about all of the claims.

Sometimes, the evidence of a water leak looks very insignificant on the surface compared to the $10-50,000 problem lurking underneath the drywall. As a buyer, do not fear that doing an inspection and discovering mold will put an end to your purchase. Once mold is discovered, the seller will have to remedy the issue or face the challenge of having to disclose it to all subsequent prospective buyers, who, like you, will want it repaired.

As a seller, having a mold inspection prior to the close of escrow, or preferably prior to the sale, will give you the ability to use your own contractors to fix the issue. If you wait for it to be discovered by a buyer, you could very well end up with less reputable mold companies, a hysterical buyer, and agents who don't really understand the problem. The risk of unnecessary stress and unnecessarily high financial costs isn't worth not paying the money for a pre-emptive mold inspection.

I have begun to think how strange it is that a seller is required to do a termite inspection prior to closing escrow but that a mold and water intrusion inspection isn't required. This doesn't make sense to me. Most of the time termites are discovered, it's a pretty simple inexpensive fix. Whereas mold and water intrusion repairs are far more troublesome and expensive.

Having mold doesn't always mean your health is threatened or that your property is going to fall to pieces. It doesn't mean your home is plagued by something sinister. It just means some water got inside and is taking long enough to evaporate that mold has time to grow. Anyways, I hope that this article helps people to better decide what is going to make sense for them.

To sum it up, get a mold inspection regardless of anything else. And, if you need to find reputable, honest people in this field, contact me. It's better to find the problem and fix it sooner rather than later.

Simon Salloom is a Realtor with Coldwell Banker. He specializes in Westside real estate. His web-site is www.santamonicarealestatesearch.com