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UNEMPLOYMENT STILL RISING AND SO ARE MORTGAGE DELINQUENCIES … Nearly ¼ of all FHA loans are at least 30days behind, and mortgage delinquencies have hit a new high in the 3rd quarter. Rising unemployment is starting to hurt those with good credit, as we’re starting to see foreclosures of those with hold 30 year fixed rate conventional loans. Constant unemployment and a rocky economy are affecting many Americans (not just the subprime crowd). Optimists say the housing market is improving, but the pessimists say there’s still a ton of foreclosures to be dumped on the market and higher inventory could continue to hurt values.
With stricter Fannie Mae (FNMA) guidelines coming out in January 2010, many homeowners will not be able to refinance to lower their mortgage payment or payoff their consumer debt. In the past the average debt-to-income ratios were 45-50%. FNMA is now lowering these guidelines by 5% to a strict 45% or less. That 5% difference can make all of the difference for a borrower and their ability to qualify to refinance their mortgage. Most Underwriters are starting to use these guidelines now for borrowers who are close to the maximum for being able to qualify. If in doubt the Underwriter will error on the conservative side.
I expect a new wave of foreclosures to hit our market within the next six month. Now is a great time to add a bank owned property to your real estate portfolio. Single family properties create great streams of rental income and are easy to sell when the market improves and your ready to move up to larger properties.
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