Fannie Mae, Freddie Mac and FHA stop propping up the market

[Mark K]

It's the same principle as those "equity gifting" programs such as Nehemiah & Americandream where the seller of the home gifts equity towards the buyer's down payment.

I was owner/principal broker of a real estate office in the late 80's-early 90's when these programs were popular. On many occasions, the BUYERS walked out of closing with a check. Getting paid to buy a house, not bad.

 

[NC Appraising]

Good topic- suggestion - the title should be the NEW home market ( not just the market ), or stop propping up new home prices -

I have often wondered why this is allowed,, and what regulation would stop it - I have addressed this before wrt builder "preferred financing," which can be the lender who financed the project or a lender the builder owns -consider maybe a large % of homes in development is financed by it - the builder offers a borrower paid closing costs or perks such as a "free" upgrade package - and the appraisals just rubber stamp the price, especially the first original sales and each sale is then used by a valuation or appraisal as the comps

Unfortunately, in my market, I am also seeing this in the resale market. Not as much tho. Seller contributions are increasing within the past month and it seems, per the comps, a lot more buyers are also using FHA. Not a good sign.

Seller contributions were mostly 0-6k and now they are 8-20k for resales (mainly at the 200-500k price point); although not in every single sale.

Home prices are also rapidly increasing within the past two-three weeks. More migration to the Charlotte Market and the supply of homes in most markets are under 1 month.

The other issue is that builders are not really building spec homes like they did back in 2008. Most are pre-sale homes.....

 

[NC Appraising]

Way, way, way back while I was still appraising in SoCal....
Some builders gave concessions to new buyers (instead of lowering prices) because they didn't want to **** off buyers who purchased in earlier phases....

That is still true.

The main reason is still how much can the buyer afford, the monthly payment. The price of the home is only important as to what the lender said the maximum approved price is (the max prequalification amount).

The builder is feeding the buyers a bunch of crap on the buy down scam that they are pushing....they are selling the buyers on "just refinance" in 2-4 years when rates are lower.....

Overall, it is a bad deal for Fannie because the rate buy down is just a pyramid scheme...the money is gone into thin air after 3 years. If the builder just reduced the price by $25k, it would reduce the liability for Fannie if the home was to go into foreclosure. Same for the borrower if they needed to sell within the next 2-4 years.

For example: 400k loan at 7% ir =$2,539 payment

buy down 1907, 2145, 2396 and then a fixed payment of 2,659. A overall bad choice for the borrower.

Fannie Mae Announces Sale of Non-Performing Loans

/PRNewswire/ -- Fannie Mae (OTCQB: FNMA) today announced its latest sale of non-performing loans as part of the company's ongoing effort to reduce the size of...

www.prnewswire.com

 

[The Bob]

Brandon to the rescue. This was just released this afternoon.

FACT SHEET: President Biden Announces Plan to Lower Housing Costs for Working Families | The White House

Building and preserving over 2 million new homes to lower rents and the cost of buying a home President Biden believes housing costs are too high, and

www.whitehouse.gov

 

[NC Appraising]

Brandon to the rescue. This was just released this afternoon.

FACT SHEET: President Biden Announces Plan to Lower Housing Costs for Working Families | The White House

Building and preserving over 2 million new homes to lower rents and the cost of buying a home President Biden believes housing costs are too high, and

www.whitehouse.gov

I hate getting political on this forum. I hate all politicians...but they truth needs to be spoken. (not getting into the immigration for or against here, just pointing out the hypocrisy ) The US just let in over 7 million undocumented people within the past several years. Where are all of these people going to live? It is already being reported that builders are +-5 million units behind.

 

[NC Appraising]

The main reason is still how much can the buyer afford, the monthly payment. The price of the home is only important as to what the lender said the maximum approved price is (the max prequalification amount).

The builder is feeding the buyers a bunch of crap on the buy down scam that they are pushing....they are selling the buyers on "just refinance" in 2-4 years when rates are lower.....

Overall, it is a bad deal for Fannie because the rate buy down is just a pyramid scheme...the money is gone into thin air after 3 years. If the builder just reduced the price by $25k, it would reduce the liability for Fannie if the home was to go into foreclosure. Same for the borrower if they needed to sell within the next 2-4 years.

For example: 400k loan at 7% ir =$2,539 payment

buy down 1907, 2145, 2396 and then a fixed payment of 2,659. A overall bad choice for the borrower.

 

[andrew81]

I am not in a speculative market with developer new construction. New homes are custom built on an individual basis by general contractors.
New construction is not purchased. It is funded with cash or mortgage finance construction loan.

From reading this post, I believe the definition of Market Value may not be followed by an appraiser that uses sales sold with: creative financing, preferred lender, closing cost credit, free upgrade packages, and other ways to inflate home prices to cover buyer give backs; without an analysis of the affect it had on price and applying adjustments, if necessary.

Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale...
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

 

[George Hatch]

If people were to be deported it would likely be of effect on the rental markets. Which in turn is of effect on the sales market.

 

[Mejappz]

Mattamy is offering up to $24,960 towards closing cost when financing with Mattamy Home funding. Closing cost credit may be used for closing costs, prepaids, escrows, interest rate buydown & 1 year of HOA dues.

Why are you allowing this?

Do not blame appraisers for this when they go into foreclosure in three years.

The answers you seek are here.

Have Fannie and Freddie Wrecked the U.S. Housing Market?

The Fannie Juice has been much more crippling than initially thought a new report shows. *** FOR IMMEDIATE RELEASE *** HAVE FANNIE AND FREDDIE WRECKED THE U.S. HOUSING MARKET? VENTURA, Calif. (March 8, 2024) – From March 2020 through 2023, mortgage giants Fannie Mae and Freddie Mac caused...

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