Fannie Mae has just announced two program changes to the My Community Loan Program which will have significant impact on future My Community Loans.
The first change is that effective immediately Fannie Mae is requiring that 1 point be charged on all My Community Loans. Fannie Mae is calling to this cost a “Risk Adjustment”. This additional cost is across the board for ALL Lenders, they are not making any exceptions. This 1 point risk adjustment can be included in the Seller Paid Costs that Fannie Mae allows on My Community Programs, but no matter how you look at it, it is an additional cost.
This change could have a very negative impact on Buyers who might have had enough money for closing costs prior to this change, but now are not able to come up the additional money. My Community is a 100% Loan Program, so Borrowers who apply for this loan usually have very little money, this means any additional cost can have a tremendous impact, much less a full point added on to the closing costs.
The second program change that Fannie Mae recently announced was on the Expand Approval Level 2 Loans (EA-II). Effective July 22, 2007 EA-II Loans will no longer be eligible for the My Community Program. Also any Automated Underwriting (DU) approvals prior to this date must close by August 24, 2007 in order to take advantage of the prior approval.
This change will have a significant impact on the Borrowers monthly payment, because of the additional PMI costs. The PMI multiplier for a My Community Loan is .59 as opposed to a regular EA-II which has a 1.42 PMI multiplier. What this means is that a My Community Loan has a $49.17 PMI payment per every $100,000 borrowed, as opposed to an EA-II Loan which will have a $118.33 PMI payment per every $100,000 borrowed. That is a huge difference, and could be the difference between a Borrower qualifying for a loan or not.
These are the first changes that I have received to 100% Loan Programs, but we have all been expecting changes to happen. Hopefully there will not be many more, but it is very likely that others will follow in not only the 100% Loan Programs, but also in other Loan Programs. As I learn about more of these changes I will pass them on, so stay tune.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
This has been a busy week, I have had barely enough time to make comments on the Posts I frequently visit here on ActiveRain. So this is my first opportunity to Post a blog about something special that happened to me this week. I am in the process of hiring a new Loan Officer to cover New Haven, CT for McCue Mortgage. On Wednesday the New Have Register held a Job Fair at the Chevrolet Theater in Wallingford, CT. The Job Fair was well attended and I even have a couple of candidates that I plan on scheduling for a formal interview. That in it self would be gratifying, because most of the time these Job Fairs can be a complete waist of time. But that was not what special about Wednesday.