Fannie Mae Rolls Out New Lending Rules December 13, 2010

Starting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines.

For some mortgage applicants , the loan approval process will simplify. For others, it will toughen. How you'll be affected personally will depend on your credit profile and your loan characteristics.

Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for downpayment will be easier.

Undetr the new guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae's typical, minimum 5% personal downpayment contribution. Downpayments on homes meeting the above criteria can be comprised of 100% gifted and/or granted funds.

Buyers of second homes and multi-unit properties, however, are not exempt.

There's also two changes pending with respect to revolving debt.

1. Debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations
2. Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance

Both of the above should increase the number of loan denials in 2011.

And, lastly, Fannie Mae changes some of its documentation requirements, the most noticeable of which will be with respect to income verification. Salaried workers and applicants whose commission/bonus accounts for less than a quarter of their income will have fewer paystubs to produce for underwriting.

Loan applications taken prior to December 13, 2010 are exempt from the new rules.

Fannie Mae's complete guideline changes are available online at http://efanniemae.com.

2011 Conforming Loan Limits : No Change From 2010

Conforming mortgages is so named because, literally, they conform to the mortgage guidelines set forth by Fannie Mae and Freddie Mac.

Of the many traits of a conforming mortgage, one is "loan size" and loan sizes have limits. Mortgages exceeding this loan size limit cannot be securitized as a conforming mortgage and, therefore, are ineligible for conforming mortgage rates.

Conforming mortgage rates are often the cheapest source of mortgage money , all things equal.

Each year, the government re-evaluates its maximum allowable loan size based on "typical" housing costs nationwide. Loans in excess of this amount are often called "jumbo".

Between 1980 and 2006, as home prices increased, so did conforming loan limits -- from $93,750 to $417,000.  Since 2006, however, home prices have retreated but the conforming loan limit has not.

In 2011, for the 6th consecutive year, $417,000 will be the country's conforming mortgage loan limit.

Conforming loan limits very by property type. The complete breakdown is as follows:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Despite the limits, some parts of the country get "loan limit exceptions". In areas considered "high cost", conforming loan limits range from $417,001 to $729,750. High-cost is defined by the median sales price of a region.

Los Angeles County, for example, is a high-cost region, along with a lot of California. There are less than 200 such areas nationwide, though.

You can verify your local market's loan limit via the Fannie Mae website. A complete county-by-county list is published online.

Home Cooking - Carmal Apple Cake

Warm Caramel Apple Cake

Cake

1/2 cup butter

1/4 cup whipping cream

1 cup packed brown sugar

1/2 cup chopped pecans

2 large cooking apples, peeled, cored and thinly sliced (about 2 1/3 cups)

1 box yellow cake mix

1 1/4 cups water

1/3 cup vegetable oil

3 eggs

1/4 tsp. apple pie spice

Topping

2/3 cup Betty Crocker Whipped fluffy white frosting

1/2 cup Cool Whip thawed

Caramel ice cream topping

1. Heat oven to 350. In heavy saucepan cook butter, whipping cream, brown sugar over low heat, stiring occasionally, just until butter is melted. Pour into 13x9 inch pan. sprinkle with pecans, top with sliced apples.

2. Mix cake mix, water, oil, eggs and apple pie spice with mixer on low until moistened. Beat on medium speed 2 minutes. Carefully spoon batter onver apple mixture.

3. Bake 40 to 45 minutes until toothpick inserted near center comes out clean. cool in pan 10 minutes. Loosen sides of cake from fan. Carefully turn platter and pan over. Let pan remain on cake about 1 minute so carmel can drizzle over cake. Remove pan.

4. In small bown mix frosting and whipped topping. Serve warm cake topped with frosting mixture and drizzled with caramel topping.

Makes 15 servings.

Pending Home Sales Data Points To Higher Home Prices This Fall

Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May's post-tax credit drop-off.

A "pending home" is an existing home under contract to sell, but not yet closed.

According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.

As a real-life illustration, after July's 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July's Pending Home Sales Index predicted it.

Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:

• Northeast : -2.9% from July
• Midwest : +2.1% from July
• South : +6.7% from July
• West : + 6.4% from July

That said, real estate markets aren't "regional" -- they're local. Just as there are improving markets within the Northeast Region, there's worsening markets in the West.

Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.

My Greatest Real Estate Torment!

With The Start Of Autumn, An Easy Way To Save On Energy Bills

With the start of autumn comes a chill in the air, plus a simple way to drop your home's energy bill. For homeowners with ceiling fans, it's as simple as moving a button.

In this vintage video from The Weather Channel, you'll learn how the blades of ceiling fan are meant to work, and how they amplify a home's heating and cooling systems. You'll also learn the optimal settings for blade rotation, and how to reverse your room's air flow to take advantage.

A quick "cheat sheet":

• When a home's heating system is on, rotate fan blades clockwise
• When a home's cooling system is on, rotate fan blades counter-clockwise

Running a ceiling fan consumes a nominal amount of energy as compared to adjusting your home's overall temperature. On a warm day, for example, running a ceiling fan creates a "windchill effect", reducing a room's effective temperature by 4 degrees -- all with the equivalent power of a 100-watt light bulb.

On a cold day, the fan pushes hot air back from the ceiling where it tends to collect.

If your home is without ceiling fans, installing them is inexpensive and easy.  There's videos online to walk you through the steps, or you can call a qualified electrician. Need an electricians name? Call or email me -- I'm happy to offer a referral.

America's Most Expensive ZIP Codes (2010 Edition)

The value of a home is based on the basic economic principle of Supply and Demand. When the number of buyers exceeds the number of sellers, home prices rise. Conversely, when sellers outnumber buyers, home prices fall.

There's always a opening price point for negotiation and that figure often factors in specifics like square footage, number of rooms, and finishes and amenities. Location matters, too.

On a ZIP code-by-ZIP code basis, prices can vary wildly and it's tiny, tony 91008 -- located in Duarte, California -- that tops the 2010 Forbes list of America's Most Expensive ZIP Codes. Home to fewer than 1,400 residents of Los Angeles County, the ZIP code's median home cost is $4,276,462.

By contrast, the median home cost across all of Duarte's ZIP codes is just $358,454.

As listed by Forbes, America's 10 most expensive ZIP codes are:

1. Duarte, CA (91008) : $4,276,462
2. Atherton, CA (94027) : $4,010,200
3. Rolling Hills, CA (92074) : $3,892,456
4. Alpine, NJ (07620) : $3,814,885
5. New York, NY (10014) : $3,785,445
6. Beverly Hills, CA (90210) : $3,684,150
7. New York, NY (10065) : $3,626,001
8. Belvedere (94920) : $3,283,269
9. New York, NY (10012) : $3,221,371
10. Santa Barbara (93108) : $3,151,220

The real estate market is a local one, as evidenced by the Forbes list. Even within large cities like New York, there are areas that stand out from the pack in terms of cost and affordability and the same is true for all cities.

Therefore, when you need local market data , look past the "national statistics".  Talk to a real estate agent with local market knowledge instead. It's the most reliable way to get data that matters.