It’s because of a federally-mandated mortgage-pricing scheme known as “loan-level pricing adjustments”.

In effect since April 2009, loan-level pricing adjustments are changes to a loan’s base rate and/or fee structure based on that loan’s inherent risk to Wall Street. It’s similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.

More risk, more cost.

In mortgage lending, loan risk can be loosely grouped into 5 categories. Mortgage applications in Tucson featuring any of the five traits are subject to price adjustments:

1. Credit Score (i.e. the borrower’s FICO is below 740)
2. Property Type (i.e. the subject property is a multi-unit home)
3. Occupancy (i.e. the subject property is an investment home)
4. Structure (i.e. there is a subordinate/junior lien on title)
5. Equity (i.e. mortgage insurance is required by the lender)

Furthermore, loan-level pricing adjustments are cumulative.

A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It’s these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers — your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs.

The government’s loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just give us call at 520-331-LEND (5363) help with interpretation. Let Tyler Ford and Todd Abelson, Tucson’s top mortgage team, help you with your home financing needs.

1. Borrowers using ARMs (Adjustable Rate Mortgages) with a fixed period of 5 years or less, MUST qualify based upon the GREATER of the fully adjusted rate -or- the start rate + 2%.
2. Use of Interest-Only loans will no longer be allowed for Cash-out refinances, rental properties, or multi-unit properties (even if owner-occupied). Furthermore, the Borrower must have a 720 FICO score AND 24 months of PITI reserves!
3. Elimination of Balloon programs (they are actually called 5/25 or 7/23 “Two-Steps”)
4. Better definition of restrictions on pre-foreclosure or Deed-in-lieu of foreclosure

Click here to read the entire announcement

Call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson Arizona for all your mortgage needs at (520) 331-LEND

I’m investigating details so standby for details! (click for release).

Call Todd Abelson and Tyler Ford at Sunstreet Mortgage in Tucson, Arizona for all your Mortgage needs!

This is a MUST READ for all Tucson Realtors® and Tucson home buyers.

There is a new program is called Home Path and it is a FNMA product that helps Fannie Mae get rid of the foreclosed homes that they currently own. The benefits of the program are listed below. The homes must appear on the www.homepath.com website to be eligible for this program.

If you have any questions please contact Tyler Ford and Todd Abelson of Sunstreet Mortgage. We can help you get financing on ALL Home Path homes.

Great Benefits

1.        NO appraisal, the contract price is the start point for LTV/CLTV
2.        Up to 97% financing -Expands availability of credit to borrowers
3.        NO declining markets policy….YEEEHAW.
4         NO MORTGAGE INSURANCE
5.        6% Seller contribution
6.        Can by as investment properties with only 10% down and NO mortgage insurance

Things you need to be aware of:

1.        Must be a FNMA owned home that can be found at www.homepath.com  
2.        Underwrite on purchases running 3-4 days

Once you are on the HomePath.com website you can search for the Tucson homes in the search section which is shown below.

The reason why Fannie Mae’s mandatory loan fees are hitting lender pricing so far in advance is because lenders can take up to 30 days to package and sell a loan to Fannie Mae post-closing.  In effect, this moves the April 1 start date to March 1.

Then, figuring that March 1 is roughly 45 days from now and that 45 days is a normal window on which to close on a home or on a refinance, the start date again pushes back, this time to January 15.

Given lenders’ typical timeframe to close, fund, and sell a loan to Fannie Mae, in other words, it’s normal that pricing reflects the fee changes two-and-a-half months in advance.  Homebuyers and would-be refinancers would do well to take notice.

If you are floating a mortgage rate today — or shopping for one — consider locking it in before the close of business.  Effective Monday, any number of traits in your home loan could increase your closing costs:

• Your credit score
• Your downpayment / equity percentage
• Your home’s property type
• Your reason for wanting a mortgage
• Your loan type

For a complete look at Fannie Mae’s new, mandated loan fees, visit the Fannie Mae web site.  If you have trouble interpreting the worksheet, call or email me and we can talk about it together.