There are significant changes being issued by Freddie Mac and, most likely, by Fannie Mae which will significantly impact the way in which ALL lenders must price Conventional loans. These changes will take effect as early as March 31, 2008.
Some changes are:
- For ALL loans with the loan to value of 80% or higher, a LOAN LEVEL PRICE ADJUSTMENT of .30% will be imposed if the credit score is under 740
- 100% financing suspended for Freddie Mac; 97% is the maximum CLTV
- If loan to value is more than 60% and credit scores UNDER 720, additional LOAN LEVEL PRICE ADJUSTMENTS of .5% up to 2.75%, depending on the credit score will be assessed
- 100% financing available ONLY on "Home Possible" loans
All lenders will be required to follow the Investor guidelines and must charge the fees; some lenders will reflect the fees in a higher interest rate while others will disclose them as additional closing costs. The information I'm providing to you is based on a preliminary review of Investor memos, and may not be complete at this time.
