The Ready Way

Suggestion: Hey right hand see what the left is holding and other wild ideas to solve the crisis

Author: Administrator

It seems as though often these days the left hand does not know what the right is doing.  The government has just greatly restricted lending via Fannie Mae reducing the back end debt ratio down to 45% from 64%.  The back end ratio includes your principal, interest, taxes and insurance + all your credit card, auto, student loans, etc…   What this means is yout total debt cannot exceed 45% of your gross income.  Dropping from 64-55 fine but 64-45 is HUGE.  That restriction will make it impossible for many people to buy or refinance a home unless they do FHA.  FHA, which keep in mind is also looking at adding new restrictions.

Since Fannie Mae made the move to 45% the banks are following suit as they should, since they have been targeted for risky practices in the past.  This has led to a giant segment of people virtually being stamped with denied on their loan applications.

Today our President, implored the banks to lend more.  Hmm…Did no one tell him about Fannie Mae’s new rule?  Did they forget to tell him about the troubles with FHA?  

Banks are lending right now as long as people fit within the guidelines.  Generally, the guidelines that Fannie Mae sets. Obviously the banks have noted the ludicracy of the contradiction and thus the quick movement to pay back bail out funds. 

In theory if one really wanted people to get help with modifications why doesn’t Fannie Mae have a loan modification program where you can refinance your house even if your note is not currently owned by Fannie Mae for a lower rate even if it is completely and utterly upside down. I am talking about houses worth $600,000 with $700,000 loan amounts. If they can qualify to make the payments at today’s low rates, why not? I mean all the money used to bail out the banks was to help people right?  They want the banks to modify loans that are utterly and completely upside down. 

I constantly have people come to me who are in ARMS and slightly upside down.  All they want to do is finance into a fixed rate and we cannot because they are upside down.   That seems like a missed opportunity to fix what will potentially become another foreclosure if not handled. 

There are solutions. We just need to think outside of the box.

This entry was posted on Monday, December 14th, 2009 at 9:33 pm and is filed under Foreclosure, Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.