Quote:
Originally Posted by JustRalph
Thanks.
Question, these sub 680’s will be brought back into the market by this Biden change? Or are they opting for new products?
Are the ARMS back and if so, (I know some never went away) if not where do the sub 680’s run to? Or are they just out of the game completely?
Under 600’s gotta be drawing dead right? FHA loans still malleable and 595’s able to get in? From your post it seems not?
I’m having lunch with a real estate agent friend next week. He says things are picking back up. I would think this Biden rule has to bring some back into the market…..but at what cost?
From the article link above:
“ It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post.
“It’s unprecedented,” added David Stevens, who served as Federal Housing Administration commissioner during the Obama administration. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.”
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In order;
The issue isn't the rate with the sub 680's its actually getting the automated underwriting systems (AUS) to even take them. Freddie has Loan Product Advisor (LPA) and Fannie has Desktop Underwriter (DU). Typically we aren't even getting approvals on them.
ARMs are basically 90% of what I'm doing right now. Typically 7/6 ARMs where the rate is locked for 7 years. They still get ran through AUS. Most of these people will have to turn to FHA or Rural Development for approvals and even then they rarely will defeat a conventional offer.
FHA doesn't have a minimum credit score but approvals below 620 are rare. Lowest FHA I've ever seen accomplished was a 565. In my 10 years I've witnessed maybe 10 below 600 ever...
To your quotes;
A lot of people in the industry are as psychologically damaged by the rate increases as the public. They are what they are though and inventory still pends up in rapid time.
I'll give a example from yesterday though about why this makes some sense. I had a 24 year old kid who submitted for a preapproval. Lives in Connecticut, already owns a house, has two credit cards, and a paid off auto on her credit report.
Score, 717.
Perfect payment history on everything but her lack of history by being young and the fact she has zero balances on her credit cards hurts her score (yes this is a thing). Her rate on a 7/6 was 5.625. If I bump her score to a 740 its 5.25.
That's a wild swing from A paper to A+ paper.
Finally, at the end of the day Fannie and Freddie sell these loans on the secondary market. If the weighting were to create too many bad deals in the bundles nobody would buy them.
I don't suspect that will be the case.
