Wednesday, February 16, 2011

GSE Reform

So the big news late last week came from Washington as the President released some rough details on possible GSE reform. Of course there weren't too many details and specifics on Fannie and Freddie but mortgage bankers did get a few unexpected curve balls that surprisingly haven't garnered as much attention as one would have thought.

Key updates to note:
-Max ltv to be lowered on Agency programs. Expect Fannie/Freddie to require a 10% down payment and a maximum ltv of 90, down from 95. Expect this to push some more volume toward FHA programs.

-Temporary high balance loan limits are set to expire in October. This will mostly affect those in the northeast and California. A re-set from 729k back down to 625k could certainly hurt some regional real estate markets. It would be a little too presumptuous to count on the private labeled jumbo products to support this portion of the market.

-Although you wouldn't think FHA loans would included in this GSE reform, they're party of the party as well. Expect the annual MI premiums to increase by .25% come mid-April; I'm thinking case numbers on/after 4/15 but we'll just wait for the mortgagee letter. This isn't a tremendous increase but it will have an impact on affordability and qualifying and it's just another item for management and IT to implement and track.

Sure there are more immediately pressing issues facing mortgage bankers right now, but these updates cannot be ignored.

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