February 22nd, 2008 6:25 AM by Kathy Delbridge
Recently, several Mortgage Insurance (MI) companies have published a list of housing markets that have been classified as a Declining Market.
The Atlanta MSA (Metropolitan Statistical Area) is classified as a declining market on this list.
Immediately, all loans for any property that is located in a "declining market" will have an immediate 5% Loan to Value reduction, if the MI company that the lender uses is one of the companies that has published the declining market list.
While not all MI companies have published a "declining market" list, the MI companies that have not published this list have very clear guideline changes that state "if the appraiser comments that the values have been declining", the 5% LTV reduction applies to the loan. This does place a huge burden on appraisers.
If a buyer was prequalified with one of the several lenders that has already stated that 95% is the maximum loan to value for loan in the Atlanta MSA, this basically means that if a buyer qualified for one of Fannie Mae or Freddie Mac's 100% loans, that buyer can now only receive a 95% loan, regardless of the fact that they qualified for a 100% loan. However, they they can still find another lender that still offers 100% loans (through a MI company that still does, for now) or their broker will need to insure they can place the loan with one of their lenders that is still doing these loans through a MI company.
These changes also affects Fannie Mae's My Community Mortgage and Freddie Mac's Home Possible loan, both of which were created to serve the lower income borrower.
For any borrowers that still need a loan with very little down, FHA is the perfect loan option for those borrowers. FHA only requires a 3% down payment, and down payment assistance is still allowed on FHA loans (for now). The current maximum Loan amount allowed on FHA loans in the Atlanta MSA is $252,890. With the recent passage of the economic stimulus package, there is speculation that the FHA loan limits for the Atlanta market could increase to the high 200's or the low 300's.
Since we, HLM Mortgage, are a broker and have access to several lenders, we do still have lenders that we work with that is still closing 100% loans in theAtlanta MSA.
I hope you have found this information to be informative and if you need further clarification, please do not hesitate to give me a call at 678-773-0651 or email me at firstname.lastname@example.org.
Kathy Delbridge, CMPS