Home loans: Fannie and Freddie’s new home loan rules

Fannie Mae and Freddie Mac are popular mortgage firms. They became popular due to the strict rules enforced by the Federal Housing Administration (FHA) for qualifying for loans and mortgages. It became the last resort for many inspiring home owners. These people turned to the private market for finance. But under the present financial crunch Fannie and Freddie have also made their rules stringent.  They are charging developers for reviewing Florida condominiums and checking if they meet their newly set stringent measures of mortgage requirements.

These newly introduced strict rules are forcing people to look the other way and try out other options. The FHA charges no fee and therefore is gaining in popularity.

Fannie Mae introduced new rules on January 15, 2009.  These rules would protect new buyers who have been crippled due to defaults and backlogs of maintenances. Florida has a large number of condos and hence the rules have been designed with Florida as the epicenter. There are a large number of incomplete buildings and many unoccupied ones too in Florida.

The new rules takes into consideration many factors like fee delinquency, number of users of the condo unit, non residential uses, percentage held by individual and group etc. The company aims at building a stable mortgage source all across the nation to protect the common tax payer and be able to re align the business market in spite of the risks involved in present markets. They would be able to provide liquidity and support the market so that home ownerships would increase leading to stabilization of communities that have been adversely affected by the economic and housing market crash.

Fannie Mae and Freddie Mac usually buy most of the loans of the country. The FHA insures only fifty percent of the mortgage. FHA approval is valuable since it adds credibility to a proposed building in private sector. The review fees which would amount to around fifteen thousand dollars with Fannie and Freddie would be needed with the FHA also, of course it would be under other longstanding requirements. According to Freddie and Fannie, this amount can be transferred to the developer.

The new rules have been created so that there is a reduction in the mortgages and loans availed from here.  These rules are hard to stomach for the developers and lenders alike. The mortgage firms are now under the regulation of the federal government and hence the implementation of new rules. The general opinion about the rules state that they would limit the options available to borrowers and hence there would be more number of bulk sales. Condo Vultures Realty is of the opinion that Fannie and Freddie would be now only last resorts for obtaining funds.

Fannie Mae is supported by the lenders they are working with and the cost is transferred to the developer leaving minimum liability on them.  Fannie Mae is responsible for the conducting of the new rules. This is beneficial for the lenders since exceptions are left to their discretion.  The rules narrow down Fannie Mae’s exposure.