Long Island Real Estate Market: Mortgage Matters July 2008

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers |

MARKET UPDATE—WHAT TODAY’S HEADLINES MEAN TO CONSUMERS AND OUR STRATEGIC PARTNERS

Date: July 14, 2008

TOPIC #1- FHA Risk-Based Pricing Rules go in effect today. Many people are unaware that the FHA is basically a governmental insurance company. They do not lend money. They insure approved lenders (like Continental) for losses resulting from foreclosures on loans underwritten to FHA guidelines. Until today, every borrower was charged the same insurance premiums, regardless of the risk factors they were deemed to have. Now, depending on the determining Credit Score and the Loan-To-Value of the loan, both the Up-Front and Monthly Mortgage Premiums can vary. The higher the perceived risk, the higher the premium is. Talk to your CHL Mortgage Planner for more specifics.

TOPIC #2- Goodbye IndyMac (and 90 undisclosed lenders being “watched” by OFHEO). Banks being taken over by the government is certainly unsettling; however, this is all part of the cleansing process the financial services industries are facing, as a result of years of poor lending practices. The trials and tribulations of Bear Sterns, Countrywide, IndyMac, large write-downs by Citibank, Merrill Lynch and others are all symptomatic of today’s hangover from the party they all enjoyed the first half of the decade.

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