The credit noose is tightening

New rules and restrictions are coming. Zero down-no more.....

Affected loans are:

• Mortgages for certain second home purchases.
• Short-term construction loans that convert to permanent mortgages.
• Cash-out refinances.
• Investment loan applications where the buyer already owns at least three other rental properties.
• Loans with anything less than full documentation of borrower income, credit and assets.
• Too new credit with thin files.

Freddie Mack plans to restrict financing to second and investment real estate purchasers who already own interest in multiple properties after August 8, 2008. Second home buyers will be ineligible for new mortgages through Freddie Mack if they have ownership interest in more than a total of four properties securing debt, including the one they propose to finance. The same for loans for rental houses and condos, and other investment properties. Freddie allowed up to 10 rental properties carrying mortgages.

Also affected, cash-out refinancing within the prior six months. The company defines a cash-out as any refinancing where the replacement loan balance exceeds the previous balance by 5% or more.

Meanwhile, private mortgage insurers- who provide loss coverage for lenders and investors on loans where down payments are less than 20%. Are also scaling back especially in declining areas-like Miami, Fl. One of the largest insurers, Genworth FInancial is no longer taking applications for second home purchases anywhere in Florida, irrespective of borrowers' credit scores, assets or other characteristics.

PMI Group. another high volume insurer, is following suit. Including boosting minimum credit score requirements for "Jumbo" loans nationwide to a 700 FICO, and now will require at least a 10% down payment. And also ruling out stated loans.

MGIC, the largest private mortgage insurer, eliminated all "Option ARM loans".

Now wonder get rich quick, no money down infomercial's are seen with less frequency these days.

 

For professional advise on all aspects of buying or selling Real Estate, please contact me Richard Recuset at-786-287-9272 -email: RecusetRealEstate@Gmail.com

The Recuset Group

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