NEW Community-Owned or Privately Maintained Streets FNMA Requirements

In our ever-tightening environment appraisers are doing their research more carefully and lenders are finding that many streets thought to be publicly maintained are actually private roads.  This triggers an underwriting requirement to provide the recorded road maintenance agreement---which often does not exist.

If the property is not situated on a publicly dedicated and maintained street, then it must be situated on a street that is community owned and maintained or privately owned and maintained. There must be adequate vehicular access and there must be an adequate and legally enforceable agreement for vehicular access and maintenance.  

 

Community-Owned or Privately Maintained Streets

If the property is located on a community-owned or privately-owned and maintained street, an adequate, legally enforceable agreement or covenant for maintenance of the street is required. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:

•	responsibility for payment of repairs, including each party’s representative share,

•	default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations, and

•	The effective term of the agreement or covenant, which in most cases should be perpetual and binding on any future owners.

Note: If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required.

If the property is not located in a state that imposes statutory requirements for maintenance, and either there is no agreement or covenant for maintenance of the street, or an agreement or covenant exists but does not meet the requirements listed above, the lender must indemnify Fannie Mae for any losses or expenses it may incur due to the physical condition of the street or in order to establish and/or retain access thereto.

HOUSING AFFORDABILITY CONTINUES TO CLIMB

Price declines and low interest rates continue to motivate buyers to enter the most affordable housing market in 28 years.  But, at the same time, only 1 in 10 of today's homeowners say they have delayed selling due to those same market conditions.  In the past year, the National Association of Realtor's Housing Affordability Index has increased 29% overall and 19% for first-time home buyers---the highest levels during the Index's 28 year history.

The survey also found that most Americans aren't aware of how affordable homes are becoming in today's fast-changing housing market.  More than 3/4's of consumers think a median-income family can afford less than half of the homes for sale in their area.  In reality, however, a family earning a median income of $53,182 can afford to buy nearly 75% of the current homes for sale.  For 14.6 percent of first-time home buyers, the government's $8,000 tax credit provides the impetus to shop for a home this year.

Courtesy of Sherri Buttler, Sun American Mortgage Company   sherri.buttler@SunAmerican.com 

MORTGAGE IS DENIED? HERE'S WHAT TO DO

Talk about raining on your parade!  You find your home, make an offer & then learn that your loan application as been turned down.  What to do now?

You may be able to turn a "NO" into a "YES" by taking the right steps:

Low appraisal-Try negotiating with the Seller or consider making a larger down payment should you have the money.

Not enough up front Cash-Lender determines that you don't have enough money to cover the downpayment + closing costs.  Ask the Seller to assume some of the closing costs or consider a non-repayable gift of funds from a relative.  Your lender will instruct you how to document this gift.

Insufficient Income-Due to governments "Making Homes Affordable" program, lenders are using a 31/38 rule when calculating allowable loan limits. Monthly PITI (principal, interest, taxes & insurance) should not be more than 31% of your gross monthly income. Your total debt (car loans, credit cards etc.) plus the PITI should not exceed 38% of your gross monthly income.  If your credit record is good & you've been carrying an equivalent housing payment, try to convince the lender to ease this guideline. If you or your spouse are expecting a salary increase, tell the lender who can then verify the forthcoming income increase.

Unsatisfactory credit (FICO) score--Lenders are looking for defaults, bankruptcies as well as late or missed monthly payments.  The lender needs to know the full picture if these issues are due to an illness, job layoff, marital problems or other short-term situations.  If you've regained financial stability for at least a year, the lender may reconsider.  If you have an up-and-down credit history, the only solution is to reestablish prompt payment practices.  There are also a few good lenders that will assist you in "cleaning up" your credit report and therefore increasing your FICO score.  Please contact me and I can refer you to these lenders which do not charge for this service...they just want to handle your loan when it comes time to buy.

DON'T MAKE MAJOR CREDIT PURCHASES DURING LOAN QUALIFICATION

Home buyers---don't go on a spending spree using credit if you are qualifying to purchase a home. Your loan pre-approval is subject to a final evaluation of your credit report just a fewdays prior to closing. Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility ie. $300 car payment could mean that you qualify for $30,000 less in a mortgage. Even if you have sizable savings, don't make any large purchases until after closing. The last thing you want to happen is to have your loan declined and lose your new home.