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Wednesday, June 06, 2007

FNMA Reminder

I wrote before about FNMA tightening on their main subprime product. One of the changes was the addition of a 1% interest supercharge apart from the upcharges for all the risk features. To put this in perspective, an additional 1% of interest on an I-O loan for $240,000 would equate to $200 more each month - a real problem when qualifying borrowers.

The invaluable Calculated Risk elicited a comment detailing a letter sent to FNMA originators:
This is a follow-up to the announcement released yesterday regarding the immediate changes to the My Community Mortgage price adjustments. Fannie Mae released an announcement stating that My Community Mortgage loans would be assessed an additional 1.00 adjustment starting August 1st. The August 1st deadline has created an uproar among mortgage lenders due to the fact that an August 1st delivery date means that all loans need to be placed into July securities. Announcing that a loan needs to be placed into a July security when we are already into the month of June puts us in a very difficult situation because the loans locked or extended that will not fund by June 22 will have to be subsidized by corporate. If Fannie sticks to the August 1st deadline corporate will incur a loss that will exceed 1MM. Whenever corporate does not give lead time on a change it is not because we are unwilling to share in the impact of the change, but rather we have exhausted all options or in the process of finding a solution, but in the meantime cannot absorb any more loans because each additional loan will result in a loss.
Basically they shortened the effective date. The housing market, in particular, is now set for another downturn, since Fannie was one of the largest subprime lenders. Credit standards for MyCommunity were also tightened.

The main driving conditions that produced the figures I showed you below are all still full in force or accentuating.

I have more than ten mortgages and I am told this disqualifies me for a FNMA loan, is this true?
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