Spring Break
The D Market: Fannie Mae's new designation
Jessica White/DC Columnist
Issue date: 1/29/08 Section: Business
If the buyer simply cannot come up with a down payment, and the loan amount is less than the Federal Housing Administration's loan limit ($362,790 in this area), the buyer may be able to buy the property using an FHA insured loan in conjunction with a down payment assistance program. Essentially, the down payment assistance program will enable the seller to legally gift up to 5% of the home's purchase price to cover the down payment and closing costs. And notably, the FHA system is not dependent on Fannie Mae's automated underwriting system and therefore the "declining market" designation does not come into play.
Another possible solution is that the same buyer can go through Fannie Mae's competitor, Freddie Mac. As of now, simply switching from a Fannie Mae to a Freddie Mac loan product may be enough to save a deal, assuming that the appraiser does not find that the property is located in a declining market and that the appraisal meets other qualifications. But who knows how long it will be until Freddie Mac catches up to its big sister, Fannie Mae.
I do not want to end on a pessimistic, negative note. I will say that we can expect to see a lot written about this subject in the coming weeks and months. Interest rates are at incredible lows, which will hopefully entice buyers into the market. Buying a property will just require more upfront work from the real estate agents and lenders until the process of determining if a property is located in a "D market" is demystified.
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage consultant with Tenacity Mortgage. Call or email her to discuss your home purchase or refinancing needs, including FHA loans. She can be reached at 202-607-4449 or Jessica@msmortgagemaven.com. You can also apply online at www.msmortgagemaven.com.
Another possible solution is that the same buyer can go through Fannie Mae's competitor, Freddie Mac. As of now, simply switching from a Fannie Mae to a Freddie Mac loan product may be enough to save a deal, assuming that the appraiser does not find that the property is located in a declining market and that the appraisal meets other qualifications. But who knows how long it will be until Freddie Mac catches up to its big sister, Fannie Mae.
I do not want to end on a pessimistic, negative note. I will say that we can expect to see a lot written about this subject in the coming weeks and months. Interest rates are at incredible lows, which will hopefully entice buyers into the market. Buying a property will just require more upfront work from the real estate agents and lenders until the process of determining if a property is located in a "D market" is demystified.
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage consultant with Tenacity Mortgage. Call or email her to discuss your home purchase or refinancing needs, including FHA loans. She can be reached at 202-607-4449 or Jessica@msmortgagemaven.com. You can also apply online at www.msmortgagemaven.com.
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