Mecosta County Mortgage Rules Will Ease
The financial press has been on it for a while: back in September, Bloomberg News was pointing out that FHA mortgages to borrowers with weaker credit scores had plummeted 19% in the previous nine months. Something, you could sense, was about to give — but, per Bloomberg, “Washington regulators and major banks continue to haggle…”
True, home prices were up, which put a smile on Mecosta County homeowners’ faces. Yet the number of sales was less than overpowering. In reaction to the housing bust, regulators had tightened the screws on mortgage lenders, causing them to raise requirements for borrowers — area mortgage applicants included. So although the price rises were encouraging, the difficulty in getting mortgages became a drag on the number of home sales.
Now the latest rumbles could be potentially breakout news for Mecosta County homeowners and investors — indeed, for anybody with an inkling to sell a Mecosta County home. We got more than a hint of what’s likely to come. Lead rumor-monger: The Wall Street Journal.
“Mortgage Giants Set to Loosen Lending” was the front page headline. Fannie Mae and Freddie Mac were the giants: the two mortgage titans are essentially creatures of the federal government, regulated by the Federal Housing Finance Agency. They are owned by the Feds and some private shareholders (who seem to sue each other frequently). The long and the short of the story was that they are close to an agreement with mortgage companies — a deal that would protect lenders and make it easier for borrowers with weak credit to access home loans.
When Fannie and Freddie say ‘boo,’ the banks shriek in terror (and not just when it’s this close to Halloween). Their lending guidelines govern a huge proportion of the nation’s mortgages. They impact Mecosta County mortgage availability — and therefore the number of qualified potential home buyers. Following the worldwide financial meltdown, a lot of worthy people found themselves in that “weak credit” category. It couldn’t help but affect Mecosta County mortgage volume, and therefore real estate activity.
Although the Journal relied on unnamed sources, the tone of the story (and its top-of-Page 1 positioning) sounds like the principals are sending up a trial balloon. They might be testing public opinion, since the new agreement would amount to a partial rollback of the strictures created in reaction to the loose mortgage governance that preceded last decade’s meltdown. The new guidelines would make it “easier for lenders to offer mortgages with down payments of as little as 3%” for some borrowers.
Fannie and Freddie’s new generosity may have something to do with the fact that they have reclaimed tens of billions of dollars in penalties paid to them for past underwriting mistakes. The new agreement would also offer some protection for lenders on that score, which would lower mortgage creators’ overall risk calculation. If that happens, it should be the break many Mecosta County mortgage applicants have been awaiting.
If you have been looking for a positive sign to list your Mecosta County home, or if you are a potential homebuyer who’s been discouraged by tight Mecosta County mortgage lending, your wait may be over. The move was just recently announced. Give me a call if you’d like an update on that and on the overall current situation!