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IMPORTANT: Blog post modification. The source (Ohio Association of Realtors-OAR) for this blog post was inaccurate. I am sorry for the confusion. OAR incorrectly stated that new changes will apply to all single family homes. This is incorrect. Changes on April 1st will apply only to condominiums and investment properties. See previous blog post for more information: https://mybuyerbrokerblog.com/2009/01/08/new-condominium-loan-guidelines-for-2009/ I am sorry for the confusion.
Wow, this is incredible new (bad) news. It looks like the only good option for home buyer’s will probably be an FHA loan. Fannie Mae and Freddie Mac are both toughening their credit score and down-payment rules as of April 1.
In response, major lenders are already factoring in the higher fees, which reduces the effectiveness of the stimulus efforts.
Under the new guidelines:
- Buyers with down payments of less than 25 percent will be charged a three-quarter point add-on penalty, no matter how high their credit score
- Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a 1 percent add-on
- Refinancers who take cash out will be charged as much as three points if they have a low to moderate equity stake.
Freddie spokesman Brad German says the loan categories and credit risk combinations targeted by these fees “default at four-to-eight times” the rate of other mortgages backed by Freddie. “We have to manage these risks appropriately,” he says.*
Good luck out there!
*This blog post referenced “Ohio Association of Realtors” email newsletter.
Starting in January 2009, Condo loan guidelines will be even more difficult for home buyers. Fannie Mae & 
Freddie Mac guidelines will change which will affect nearly all conventional condo loans. But, FHA loans should not be affected (good news). The major change is a pricing adjustment that will increase the interest rate for the following condo loans.
- Buyer is putting down 25% or less (Loan to value percentage exceeds 75%).
- If a condo loan term is great than 15 years
The approximate rate increase on these types of condo loans will be 1/2% or higher.
These new condo guidelines would have affected nearly 99.999% of all condo owners that I have helped since 1996. This is a ridiculous new change that I think will really hurt condo sales in the Columbus, Ohio area. We are moving in the wrong direction if we want to try and help the real estate and mortgage industry recover.
Good luck out there!
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