Higher prices, higher rates, slowing sales, and now easing loan guidelines? On non-owner-occupied properties? Buying a rental property with 5% down is unheard of, and even with higher rents they are likely to negative cash flow:
Freddie Mac is consolidating its Home Possible program with its Home Possible Advantage Mortgages program. These programs offer greater flexibility and higher loan-to-value ratios (LTVs) than traditional mortgage programs.
The combined product will be called Home Possible Mortgages, and will closely align with the purpose and requirements of the previously-named Home Possible Advantage program, with some changes.
Beginning October 29, 2018, lenders will be able to offer Home Possible Mortgages to buyers with limited down payment funds. Under the consolidated program, eligible homebuyers will include:
- non-occupant buyers for mortgages secured by one-unit properties with LTVs no higher than:
- 95% for Loan Product Advisor Mortgages; or
- 90% for manually underwritten mortgages (non-occupant buyers were previously excluded from the programs);
- those who own other properties (buyers who own other properties were previously limited);
- buyers with super conforming mortgages (mortgages with high maximum mortgage limits for homes located in high-cost areas) when the mortgage:
- is submitted and receives an “Accept Risk” classification through the Loan Product Advisor; and
- has an LTV no higher than 95% (super conforming mortgages were previously not permitted);
- buyers with secondary financing, including home equity lines of credit (HELOCs), for most cases when the mortgage’s LTV is no higher than 97% (secondary financing was previously limited to 95% LTV);
- buyers using adjustable rate mortgages (ARMs), when the LTV is no higher than 75% (ARMs were previously not permitted); and
- buyers with a maximum 45% DTI for manually underwritten mortgages.
These changes are meant to both widen the pool of qualified homebuyers, and streamline programs for lenders’ ease of use.
Housing market risks broaden
By loosening the requirements for its Home Possible Mortgage programs, Freddie Mac’s hope is to encourage lenders to qualify more applicants, thereby increasing homeownership opportunities nationwide.
However, loosening requirements by allowing high LTVs, DTIs and ARMs makes lending — and by extension the housing market — riskier. For veteran real estate professionals, a growing presence of dangerous mortgage products and loose lending restrictions will sound familiar, as they all increased during the Millennium Boom and ultimately played a big part in the cause of the housing crash and 2008 recession.
Link to Article
Once more unto the breach, dear friends, once more…
If they were negative cash flow at 80% LTV before SALT caps then 95% and PMI and higher rates and SALT are a formula for disaster.
“This business will get out of control. It will get out of control and we’ll be lucky to live through it.” – Hunt for Red October.
I got this text yesterday – what would be your rate if you were the lender? These are full-doc, so that should calm any queasiness:
Hi Jim! We’re super excited to announce our Jumbo Advantage program came out with a 5% Down payment up to $1,500,000 with no mortgage insurance. It is priced incredibly well and will be a great program for the higher-end buyer with limited cash for a down payment.
95% LTV
Up to $1,500,000 loan amount
NO mortgage insurance
700 FICO
As always, I am available this weekend to help your clients.
Or how about this one? Though I always thought that qualifying based on 12 months bank statements was a more-accurate gauge of what people earn. You can Turbo Tax a set of 1040s in about 20 minutes:
Need more buyers? We work harder to qualify your Prospects!
Self-Employed borrowers, income qualify based on bank statement deposits (tax returns are NOT required)
90% LTV up to $3mm loan amount (12 months bank statements needed)
75% LTV up to $5mm loan amount (1 bank statement needed)
2nd chance financing, for Prospects that had a Bankruptcy, Foreclosure, Short Sale or Deed-in-Lieu, we can provide financing upon settlement.
This means we can lend the same month of the settlement!
Minimum 500 credit score – 65% LTV
Minimum 550 credit score – 70% LTV
Minimum 600 credit score – 80% LTV
Minimum 650 credit score – 85% LTV
Minimum 700 credit score – 90% LTV
FHA financing, with minimum credit score of 550!
Asset based qualifying, for Prospects that have the required savings but do not claim a qualifying income.
Bridge loans, we will provide a 2nd mortgage against the departing property to free up the equity to purchase the new property.
Departing property must be at a minimum listed for sale
Maximum 2nd loan amount is $400,000
Reverse Mortgage, a great product to help the empty nesters downsize!
Minimum 60 years old (62 for FHA reverse mortgages)
We are a direct lender and we provide fully underwritten loan approvals before your Prospect finds their dream home!
Please call or email me to review your client’s specific situation.
Ah, extra gasoline.
Like fire-eating, great news for the the professional, and the nimble newbies, not so great for the slow, and people with sensitive throats.