Two credit tightening items in the last 2 days...

Yesterday, I received an update from one loan company, "Appraisal guidlines in extreme declining markets"

Basically, a guidline that required more recent comps, and updates up to the date of closing, if anything else sells that would lower the comparable price. Also, in addition to sold comps, for sale comps would need to be examined to, before value could be determined.

 

Ok, so a little more difficult getting an appraisal to work, even if you find a buyer. This could force some transactions to reset sales price/ or cancel due to the appraisal contingency.

 

Today, I received the following information:

 

 

Fannie Mae and Freddie Mac will be increasing their rate adjustments effective immediately.

The following factors will determine interest rates:

If a borrower has a LTV above 60% there will be a pricing hit.
If a borrower has a FICO score below 720 there will be a pricing hit.
If a borrower is cashing out there will be a pricing hit.

As a result of these changes, interest rates will increase anywhere from .125 to 2 percent.

Loans that are not affected are My Community Mortgage (MCM), FHA, and 15 year fixed.

Example:

Today's 30 year fixed rate is aprroximately 6.375% with 0 points for a borrower with a 675 FICO score and looking to do 80% cash out.

As of April 1st for the same scenario, the rate will increase to approximately 6.75% with the borrower paying 2 points.

Although this is an industry-wide rate increase effective immediately

 

Ok, so more charges based on credit score/ and LTV.

 

Drip by drip, credit keeps getting either harder to get or more expensive.

 

  • March 26 2008 - US
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Answers (39)

Profile picture for 2 Big 2 Fail

Do you have a lsit of the "extrme declining markets"? 

  • March 26 2008
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Profile picture for Doomers NightMare

Good Spin Roberto Ribas. I've talked to local mortgage brokers and according to them interest rates for 30 yr. fixed mortgage is at 5.675% with one point. For firstime buyers, FHA will be the best route. They require only 3% downpayment and lower than 675 Fico scores. Pls, save it for yourself okay!

  • March 26 2008
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Profile picture for chuckdog24

Err.. Ummm.. Detroit's on the list Alps (despite your threads to the contrary)

 

There are dozens of properties in Detroit listed for well less than a used car. 

These boom/bust cycles are sad things. 

  • March 26 2008
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I don't recall who all is on the "extreme declining market" list, I think florida, most of socal, phoenix, las vegas, and alpine's house.... maybe its on a website somewhere, the people sending me the update write loans in phoenix, so that is all they mentioned...

  • March 26 2008
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Profile picture for ATLfemme

When I spoke with my local Wachovia mortgage broker, she said that as of 3/4/08, GA is now considered a "declining market" - and mentioned many similiar constraints albeit not quite as severe (possibly due to not being "extreme" declining?).  The big thing I noted was her comment on appraisals... she said many are coming back at or very near tax assessed value, which in the past, was considered to be way, way below what it would sell for...  in Cobb County, at least, a home might be taxed on $125k value but would be expected to sell closer to $180k...

  • March 28 2008
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The "smarter" buyers in Central FL right now are paying close to the tax appraiser's just market value as well.

  • March 28 2008
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Profile picture for supercub

Ask and you shall get

 

New Appraisal Requirements For Extreme Declining Markets
March 27, 2008 · No Comments
Arizona, Nevada, California, and Florida are currently classified as Extreme Declining Markets by Fannie Mae and Freddie Mac. As a result of this new classification, FNMA and FHLMC will require the following on all appraisals (this only applies to declining market areas):
The link

  • March 28 2008
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Wow, 720? Isn't that even above the 'old days' criteria?

  • March 28 2008
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Profile picture for BuyEqualsRent

Yeah, we are just at the beginning of the tightening phase.  Which will cause more foreclosures, which will cause more tightening, etc etc.

  • March 28 2008
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Profile picture for ATLfemme

Fascinating point from the article Supercub linked:

"Recommended Practice
If the subject property is an REO, or if the subject is located in an area where there are a substantial number of REO properties, the appraiser must identify this fact and discuss its impact on the subject’s property value. In addition, REO comparables should be considered if the appraiser believes that such comparables are legitimate competing properties. "

I've heard a lot of debates about whether foreclosures would or wouldn't impact pricing; some argued that "distress sales aren't comps".  Um.  The excerpt above sounds like a shot across the bow - I suspect it won't be too long until it goes from a "recommended practice" for "extreme declining markets" to a generally accepted norm across the board...

 

 

  • March 28 2008
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Profile picture for Mr. Dingle L. Berry

OK...all of Florida is not the same...it takes 24 hours of driving to go from Key West to Pensacola...real-estate is local! Er...I know it's not but comparing one part of Florida to another is a bit like comparing Los Angeles to Kansas City...about the same distance?

  • March 28 2008
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All of florida is a bug infested swamp full of alligators and old people that drive slowly, except for south beach which is kind of cool...

 

(just kidding, I like florida)

  • March 28 2008
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Profile picture for Mr. Dingle L. Berry

There are no Old People left in Dade County, they can not afford it.  South Beach is OK, Panama City MUCH better...Red Neck Riviara BABY!  Can you say "Girls gone wild"?

  • March 28 2008
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Profile picture for tldtms

Dade, Broward and Palmbeach are the declining markets in Florida. HOWEVER, its only in certain citys. There is a great interactive map on our local newspaper. http://www.sun-sentinel.com/news/sfl-foreclosures,0,785359.storygallery

 

I'm in one of the lowest areas for both catagories.

  • March 28 2008
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Profile picture for 2 Big 2 Fail

I LOVE Plam Beach.  I was there twice.  West Palm Beach is also really great.  I was at this really upscale street that had stores with luxury condos on top of them and valet parking.  I can't remember the name of it...

  • March 28 2008
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Profile picture for 2 Big 2 Fail

Miami on the other hand was disgusting.  I was on Collins Blvd. and the area around it and saw quite a large number of abandoned hotels. 

  • March 28 2008
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Crime in the Palm Beach area has really ramped up.  Apparently there is some psycho serial killer that has been attacking women and children at the upscale malls in that area.  Not cool.

 

I am in a little cozy nook area where the demographics are about 90% age 32-38, the schools are good, and crime is low.  That must be why the sellers here still think they are immune to the market crash.

  • March 28 2008
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Profile picture for 2 Big 2 Fail

Well, thank goodness NJ is not an extreme declining market.  Now I can HELOC my house to buy a duplex in Alpine that I have been monitoring for the last 3 years.  Out of all the houses for sale in Alpine, this house takes the crown for the largest price drops since it is in such bad condition.  I still have not forgotten the smell of the urine stained carpets in the family room. 

  • March 28 2008
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"I still have not forgotten the smell of the urine stained carpets in the family room. "

 

Oh, the memories......ew.

  • March 28 2008
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Profile picture for Coconutcream

They haven't caught the guy yet?

 

My friend just bought a $3.5M condo on A1A next to the Ritz. She didn't seem particularly   concerned that the market sucks.

  • March 28 2008
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Profile picture for Cathy Sloan

Average age of residents in Jacksonville, Florida 35.8

  • March 28 2008
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Profile picture for sndral

Anybody know if they're referring to foreclosures and the price they went back to the bank @ or foreclosures after the bank sells them as REOs?

If the former it's possible that they are actually artificially bolstering values since, unlike a lot of properties, they 'sell' eg the bank 'buys them' back @ what the mortgage was, which in many cases was 80% of peak - which would be a 20% drop whereas cali has already seen 30% drops in places.

  • March 28 2008
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Profile picture for sndral

Here's an example of what I'm curious about -

mls 764502, monterey ca - 1179 sq ft 2/1

sold 12-27-02 $530,000 that's the comp

sold 10-25-05 $759,000 that's the comp

sold 10-26-07 $639,595 to become REO'd @ 83% of '05 value

 

pending 3-27-08 $559,900 which is 73% of '05 value. 

  • March 28 2008
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Profile picture for sndral

Here's an example of what I'm curious about -

mls 764502, monterey ca - 1179 sq ft 2/1

sold 12-27-02 $530,000 that's the comp

sold 10-25-05 $759,000 that's the comp

sold 10-26-07 $639,595 to become REO'd @ 83% of '05 value

 

pending 3-27-08 $559,900 which is 73% of '05 value. 

  • March 28 2008
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Profile picture for sndral

oops-sorry, must have hit wrong button

-interestingly the bank had to drop 3 times to get a bite:

12-28-07 $612,000

2-28-08 $575,000

3-15-08 $559,900

  • March 28 2008
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Profile picture for hial2

 

 

   There are more miles from Key West to Jacksonville Fl than from Jacksonville Fl to New York..

I know the route very very well..

  • March 28 2008
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Profile picture for jeremy.b

Huh?  The trip from Jacksonville, FL to NYC is about twice as long as the trip from Jacksonville to Key West. 

  • March 28 2008
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Profile picture for Mike_oxafloppin

bump

  • March 28 2008
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Profile picture for supercub

"Out of all the houses for sale in Alpine, this house takes the crown for the largest price drops"

 

Alpine, I can't believe you said that...in ALPINE? Can't be.

  • March 28 2008
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Profile picture for 2 Big 2 Fail

If you saw the house in person, you would know why the price was dropped so much. 

  • March 28 2008
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