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Fannie Mae and Freddie Mac Release Their HAFA Guidelines

On June 1, 2010, Fannie Mae and Freddie Mac each released guidelines for implementing the Treasury Department's Home Affordable Foreclosure Alternatives Program (HAFA). These new guidelines apply instead of the HAFA guidelines for non-GSE mortgages. Servicers are required to implement these policies no later than August 1, 2010. While largely consistent with the HAFA guidelines for non-GSE mortgages, Fannie and Freddie have each made some important differences.

Problems like squeaky stairs, oil stains on the garage floor or nail pops in the ceiling can be quick turn offs for buyers.  These not need be turn offs and can simply be corrected.  Lynda Lyday addresses these and other common household problems in The Homeowner's Manual. 

Problems like squeaky stairs, oil stains on the garage floor or nail pops in the ceiling can be quick turn offs for buyers.  These not need be turn offs and can simply be corrected.  Lynda Lyday addresses these and other common household problems in The Homeowner's Manual  . 

• Oil Stains on the floor:  First sprinkle cat litter on the surface oil to absorb.  Clear away and make a paste of hot water mixed with laundry detergent.  Use a soft brush to scrub the area with the paste.  Hose with water and let dry.  If this fails try Spray & Wash or oven cleaner.

• Squeaky stairs:  Usually caused by the "treads" (the part of the step you walk on) coming loose.  If you can access below the staircase then attach an L-bracket from the underside of the tread to the stringer - the part of the stair that runs diagonally up the wall.  If you can't access from below then you can re-screw them from above by screwing through the carpet.  Be careful not to snag the carpet when screwing.  Direct the screws at an angle through the tread towards the stringer. 

As many as 180,000 buyers may not close their homes by the June 30 deadline which is required to be eligible for up to an $8,000 tax credit.  The Senate decided last week not to extend the deadline and in-fact not even to take the issue up again.  So I guess if you don't close you lose and it is your problem! "What!", you were counting on that money!

Who is responsible is up for debate.  Regardless, you can't do a damn thing about it and if you think you will sue or back out you better hold your horses!

It's not just the back log in the lending industry that is causing the though it has a lot to do with it.  Also at fault are the numerous short sales and foreclosures as well as the new lending paperwork requirements. 

Problems are more likely to develop around loans requiring added documentation and lender approvals of short sales.  These are time consuming and full of delays. 

Lender's fault you might say but really it might just be yours.  You shouldn't have tried to buy that short sale or your small credit ding that required more paperwork is now biting you again.  So, holding the lender responsible is next to impossible and if you think you will sue them don't forget about the teams of attorneys Bank of America and Wells Fargo have to bog you down in court until you are bankrupt.

"I will have to back out of the deal" says one buyer.  Careful here, the seller is not at fault and walking away might cost you your deposit.

If you find yourself in this bind then you might question your Realtor.  Don't have one?  Well, if you had, you might not be in this sticky spot in the first place.  A good Realtor would have warned you against these possible pit falls and worked to protect you against possible delays or in worse case preserved your right to cancel the contract without penalty if it couldn't close on time due to no fault of the buyer. 

Not all Realtors are alike.  Experience and education make the difference in this situation and would have paid dividends. 

As economic unease simmers investors seek safe havens for their money in treasuries and mortgage backed securities.  The increase in demand raises the price and lowers the yield thus pushing down interest rates.  The 30 year fixed mortgage fell to a low of 4.69% down from 4.75% a week earlier and 5.24% last year. According to the Wall Street Journal this is a surprise as analysts expected rates might rise after the Fed stopped buying up mortgages last month.  Now they believe rates may go even lower.  This obviously is good news for home owners looking to refinance or buyers looking to take advantage of slumping prices.  The down side is lenders are so strict with whom they will lend and require higher down payments, higher credit scores and job stability making it difficult for all but the very best to get these deals.  Jumbo loan (loans greater than $417,000)  rates are down to a low of 5.65% as of Thursday.  We will have to wait to see if this spurs home buying.

As we approach the end of the quarter there is some concern that the housing market is losing traction and a "double dip" is coming.  In fact, sales did decline nationally by 2.2% from April to May.  However, May 2010 sales were up 19.2% over May 2009. 

In the West (which Colorado is considered to be in), Sales rose 4.9% in May and median price increased by 7.4%.  The sales of distressed properties and foreclosures also declined. 

The worst housing market is in the Northeast where sales fell 18.3% and the median price fell 2.2%.  The Midwest and South remained relatively unchanged -flat. 

I use a proprietary technique I developed to forecast "futures" markets for Boulder County.  This is what I see on the horizon:

Pipeline sales for the entire county are going to be down substantially in June and July because contracts to purchase homes are down by 26%.  This is a result of the tax stimulus expiring and the tight credit markets. Inventory is on the rise as a result and is up 6%. 

On average the number of homes under contract vs. the number of homes for sale is down by 6% as of today.  

What does this mean for you:  If you are a seller it is still time to be conservative with your pricing.  Buyer's should look at this as the very best opportunity to buy because prices are still soft but beginning to firm and interest rates are an ultra low 4.5%.  

Many people think that when the tax credit stimulus expires the housing market will again collapse.  Don't panic, that is over reacting.  Don't buy into the "Double Dip" talk in the housing market just because sales of new construction and existing homes decreased by 2.2% from April to May.  That is only 125,000 fewer homes -Big Deal! 

5.66 million homes were sold in May which is up 19.2% from a year ago.  Nearly a million more homes sold this May over last May.  That is the BIG DEAL. 

The tax stimulus credit required that home buyers be contracted to buy a home not later than April 30th and close by June 30.  Since sales are only counted at closing it was expected by economists and Realtors alike that the sales numbers would remain strong through June.  If you assume it takes 30 to 45 days to close, sales in April should have shown up in May through June.  With May's numbers dropping some are panicing about a larger drop when the stimulus is over at the end of June. 

I don't know about you, but I think that if you hadn't decided by the beginning of the year or late last year to buy a home then you probably didn't wake up in March and say "I should buy a home this month".  What I mean is that the "stimulus bump" is probably not as big as anticipated therefore the drop off will not be as large as people expect.  The result - I don't expect a double dip when sales "normalize" after the stimulus expires.