Four huge mortgage guideline changesGibran NicholasFannie Mae, guidelines, jumbo-conforming loans, CMPS Institute
Fannie Mae recently announced four key initiatives that will
have a huge positive impact for home owners and buyers.
"When Fannie Mae changes their policies and procedures, it has a
wide-spread impact on homeowners," said Gibran Nicholas, chairman
of the CMPS Institute, an organization that certifies mortgage
bankers and brokers. "This is because over 60 percent of U.S. home
mortgages are securitized, meaning that they are owned by investors
like Fannie Mae and Freddie Mac who issue bonds on the bond market
using these mortgages as collateral."
The four changes are:
1. Fannie Mae will allow borrowers to refinance up to 120
percent of their home value if they are currently paying their
mortgages on time.
"This is a huge positive development for responsible homeowners
who are faithfully making their payments, but simply find
themselves in a negative equity situation due to declining real
estate values," said Nicholas.
2. Fannie Mae is renewing and expanding their partnership with
the state Housing Finance Agencies to provide $10 billion in
financing for qualified first-time home buyers.
"This is important because it gives first time home buyers
access to more financing options, thereby increasing the amount of
eligible buyers in the marketplace," Nicholas said.
3. Fannie Mae is teaming up with the Self-Help Credit Union, one
of their long-time partners, in order to help families in hard-hit
real estate markets get into foreclosed properties through a
This will stabilize communities by enhancing the options
available to renters.
4. Effective immediately, Fannie Mae will buy new
jumbo-conforming loans at the same price that they buy other
conforming loans throughout the remainder of 2008.
"This is an enormous benefit for mortgage borrowers in high cost
areas who have been largely disappointed with the persistently high
rates on jumbo loans," said Nicholas.
As part of the much touted Economic Stimulus Package of 2008,
limits on jumbo mortgages were increased from $417,000 to up to
$729,750 in high cost areas.
"The reality of the situation is that these higher loan limits
have not really been effective because Fannie Mae has charged
higher interest rates and fees on these loans versus traditional
conforming loans at or below the $417,000 limit," said
The new rules abolish this pricing difference, and allow
jumbo-conforming loans to priced exactly the same as traditional
"These low interest rates expire at the end of 2008, so now is a
perfect time for borrowers in these higher-priced markets to buy
homes," said Nicholas.
Gibran Nicholas is the founder and chairman of the CMPS
Institute, which administers the Certified Mortgage Planning
Specialist (CMPS) designation. He may be reached through his
companys Web site at www.cmpsinstitute.org.