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December Top Stories in Real Estate News

GSE’s Detail Low Downpayment Program
On December 8, 2014, Fannie Mae and Freddie Mac released details on new mortgage product offerings that will provide access to qualified borrowers able to put down at least 3%.  Both of the entities will require lenders to use automated underwriting systems to ensure borrowers have additional compensating factors such as history of successful use of credit or cash reserves to ensure they will be successful homeowners.  Lenders will be able start offering Fannie Mae’s product on December 13, 2014, while Freddie Mac will implement the program on March 23, 2015.

FHA 2015 Loan Limits Released
On December 5, 2014, the Federal Housing Administration (FHA) released its 2015 Loan Limits.  FHA’s calculation for maximum loan limits in high cost metropolitan areas of the country will remain at the 2014 level of $625,500. The standard loan limit for lower cost metropolitan areas will remain unchanged at $271,050. Any community that wishes to contest its loan limit must submit an appeal to the Santa Ana Homeownership Center no later than Jan. 5, 2015. An explanation of FHA’s loan limit calculations, FHA loan limit “look up” links and appeal information are provided in FHA’s Mortgagee Letter 2014-25.

2015 VA Loan Limits Released
On December 10, 2014, the U.S. Department of Veterans Affairs (VA) released its 2015 Loan Limits.  The temporary high cost loan limits, which are currently at 150 percent of the Federal Housing Finance Agency’s (FHFA) loan limits, will expire on December 31, 2014.  The 2015 VA loan limits will mirror the 2015 FHFA loan limits.  The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a downpayment. These loan limits vary by county.

FHA Flipping Waiver Expires
On December 10, 2014, the Federal Housing Administration (FHA) announced that it will not extend the temporary waiver of FHA’s regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition.  The waiver expires on December 31, 2014.  NAR sent a letter to Commissioner Galante on October 3, 2014 urging FHA to extend the waiver because of the positive effects of the waiver where property rehabilitation and resale of these homes has increased the availability of safe and affordable homes.  In response to a recent a negative HUD Inspector General report, however, FHA decided not to extend the waiver.

Mortgage Tax Relief and Lower Down Payments

With the turn in the economy, also comes call for changes in mortgage restrictions.

Source: National Association of Realtors

Call for Action: Mortgage Forgiveness Tax Relief
During the NAR Conference & Expo in New Orleans, NAR launched an all-member “Call for Action” (CFA) on “The Mortgage Forgiveness Tax Relief Act.”  This bill would extend an expired provision that has helped millions of distressed American families by allowing tax relief for homeowners when lenders forgive some portion of the mortgage debt they owe.  The provision expired last Dec. 31st and it is imperative to get it extended before impacted homeowners have to file their 2014 income tax.  The Call for Action asks all REALTORS® to contact their Member of Congress and United States Senators and urge an immediate vote when the “Lame Duck” session begins following the election.

Fannie Mae and Freddie Mac to Accept Lower Down payments At the 2014 REALTORS® Conference and Expo, Federal Housing Finance Agency Director Mel Watt announced that Fannie Mae and Freddie Mac are working on “sensible and responsible” guidelines to ensure borrowers who take out low-down-payment loans can afford to repay them. Director Watt stated that there are creditworthy borrowers who have enough income to afford monthly mortgage payments but not a large downpayment and closing costs. He said FHFA will offer loans with as little as 3 percent required up front from borrowers. Additionally, because downpayment size is not the best indicator of whether a borrower has the ability to repay, Fannie Mae and Freddie Mac will also evaluate the full financial picture of a borrower, including credit histories and other compensating factors. Director Watt said that Fannie Mae and Freddie Mac will also soon offer mortgages with loan-to-value ratios of 95% and 97%. However, he stressed that the new loan products will be “targeted in scope,” and only available to creditworthy borrowers.