Lately I’ve felt like Debbie Downer with the information I’ve been sharing here. On a positive note, it’s great that we have blogs to get this information out to buyers, sellers and real estate professionals…especially since we, as Loan Originators, are given very little notice these days of significant changes. I gave you an example last week, here’s one from today.
Franklin American Mortgage Company issued a revised memo that I received today announcing a reduction in Expanded Approval (EA) loan to values to a maximum of 95% LTV with a minimum credit score of 660. An “expanded approval” is when a loan scenario doesn’t quite fit the pegs needed to receive an “approval” from the AUS (automated underwriting system). There are different levels of “Expanded Approval” and to tell you the truth, I did very few (maybe 1 or 2 ever) EA loans. There’s a price hit, and at the time either FHA, subprime or Alt-A would offer a better scenario for the borrower. If you had an EA approval with First Franklin at 100% LTV, you had until 4:00 CST today to lock the loan and it was also subject to MI availability (good luck). This part of the memo didn’t bother me personally since I didn’t really use this type of loan as much as the next section.
Here was my personal zinger: Franklin American is discontinuing Fannie Flex 100/Freddie 100. The maximum LTV/CLTV is reduced from 100% to 97% including Fannie 100, Freddie 100, My Community and Home Possible programs (you can still do a Flex 97).
I still have a few lenders that are offering Fannie Flex 100 “at the moment”. However, I’m expecting 100% LTV financing with Freddie and Fannie to go the way of the do-do.
What should you do?
If you’re a Listing Agent and have transactions pending with 100% financing, I would confirm with the lender they are still valid. If you have offers on your listings with 100% financing, contact the lender to confirm they can still offer this product. And consider a quick closing.
If you’re a Selling Agent with Buyers utilizing 100% financing, your buyers should consider a “Plan B” (like 3% down for Flex 97 or FHA). I recommend reverifying transactions in process and any preapprovals.
Buyers, if you’re planning on buying using 100% LTV financing, meet with your Mortgage Professional to develop a “Plan B”. It’s good to have options in this kind of market.
Watch for my next post…featuring eeorr.