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Anthony Explains to Gene Lavanchy How FHFA Changes Mean Lower Down Payments for Buyers

Related blog: FHFA Announces Relaxed Mortgage Guidelines to Help More Home Buyers


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Well things are turning around a little bit in the real estate market and buyers appear to have the leverage. Here’s more good news for buyers now it will be easier to get a mortgage real estate expert Anthony Lamacchia of Lamacchia Realty here to explain good to see you this morning Anthony tell us what is changing?

Fannie Mae and Freddie Mac have finally realized that they overcorrected. They were too loose on regulation from 2000 to 2007 and that’s what got us into that mess and then they clamped down so hard that they made it very hard for people to get mortgages and as of last Friday they’ve announced, ok we’re going to ease up a little bit.

So when people hear Fannie Mae and Freddie Mac they get glazed over a little bit. Explain what Fannie Mae and Freddie Mac is.

Fannie Mae and Freddie Mac set the guidelines that all the mortgage companies follow. So the mortgage companies sell a mortgage and then Fannie and Freddie buy it, but they’ll only buy it if it’s within their guidelines. So the guidelines they set the mortgage brokers and companies go off of.

So essentially they required to have 5% down and now they’ll take 3% down.


Isn’t’ that what kind of got us into the big mess in the first place?

Not necessarily. Yes, they’re going to lower the down payment requirement which is great, FHA already has a 3% down requirement but they’re much more expensive. So they are still requiring good credit they’re still requiring income verification they’re still requiring for people to pay their bills and they didn’t require that before.

This isn’t one of those no doc loans.

No it’s just that the pendulum swung too far too strict and now they’re kind of bringing it back a little and that’s what they need to do.

When you talk about what’s going on as far as lowering that and people say oh well gee I make pretty good money and I’ can put 3% down is there like an income ceiling on this on who can qualify or is this open to anyone?

I wouldn’t say anybody, you have to fit into certain requirements, but as an example I don’t know if you Ben Bernanke was unable to get a mortgage 6 weeks ago. He gets paid hundreds of thousands of dollars to do speeches but he was unable to get a mortgage because he doesn’t have a consistent salary. So that was kind of funny news that they put out that’s an example of people who can pay it but they’re not qualified.

This is a reset if you will.

Exactly, it’s easing up a little bit and it should help.

This is a good thing obviously.

It’s a good thing and it’s well timed.

It is well timed because we talked about the market we’ve had conversations in the summer about it, how it was really a seller’s market people were getting asking price and above but that’s kind of changed a little bit.

It started to change in the summer and now it’s clear nobody can deny that there’s no one Realtor who would say hey the market hasn’t changed. It is undoubtedly back to a buyer’s market and how long that will last I don’t know things like will help because it will open up more opportunities for more buyers and we need more buyers to eat up the increased inventory on the market.

When did this transition kind of come in is it when people say hey the market is kind of hot I’m going to list now even though I may not want to sell and the market kind of got flooded.

Yeah I think that sellers –I’ve said this before—sellers got a little crazy. They see the market going up it went up all through 2013, and the very beginning of 2014, and then it started to slow down and as it started to slow down sellers said hey my neighbors’ house sold for x I want to get more than that. They started putting their houses out at high high prices and then the summer hit and all of a sudden buyers pulled back and what happens: less homes are selling; price adjustments are up nationally, they’re up statewide and up nationally, home sales in September were down 3% compared to last September so I don’t want to sound like everything is bad news, because it’s not, there are still buyers out there but it is undoubtedly slower.

So you think the excess inventory is related to overpricing for the most part.

A lot of it, yeah, and buyers pulling back a little bit. More inventory and then buyers pulling back it’s like a double whammy.

What do you see happening over the winter months, around here it’s a more difficult time to sell a home, not that you can’t but we think of spring and fall of sort of peak times?

I certainly hope that two things help: the interest rates coming down; the interest rates are now back in the 3s, the first time in 18 months, that’s very exciting news, and it will take a little time for buyers to realize this this new here that we’re talking about Fannie Freddie those guidelines should be changed we’re hearing by the end of the year. They’ve announced that they’re going to do it they just haven’t set a timetable yet so I’m hoping by the first of the year buyers realize hang on a second, inventory is up, interest rates are down and these guidelines are easier people can buy homes with less money down so that they have more money after a closing I’m hoping that all of that helps turn this around but I’m not going to lie to you it doesn’t go from a buyer’s market to a seller’s market in 3 months; it takes time.

Still optimistic.

Yeah I think overall the recovery is going to continue but there’s no doubt that we’re seeing a pause or a little bit of a step back in the recovery.

Thanks for coming in Anthony.


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