PMI says 10% down or no go

NEW -> Contingent Buyer Assistance Program
no_vaseline_IHB

no_vaseline_IHB

New member
<p>Do I understand this correctly?</p>

<p><a href="http://www.pmi-us.com/guidelinechanges/media/pmi_distressmktspolicy.pdf">http://www.pmi-us.com/guidelinechanges/media/pmi_distressmktspolicy.pdf</a></p>

<p>Comments?</p>
 
To me it looks like this means you can't do higher than 90% LTV period if you are in any of the markets on the second page. I find that hard to believe though. What if you pay PMI though?
 
10% down is pretty much the standard now. Fannie and Freddie started the lower LTV/CLTV back in December. Now, PMI is just following their lead. If the appraiser marks the box, that says a declining market, then the LTV must be reduced by 5%. Even if they do not mark that box, and the automated underwriting system could come up with a declining market area warning, or if the MSA (Orange County being one of them) is determined to be in a declining market by <a href="http://www.ofheo.gov/hpi_city.aspx">OFHEO</a>, or is in a <a href="http://www.pmi-us.com/media/pdf/products_services/eret/pmi_eret08v1s.pdf">high risk market determined by PMI</a>, then the LTV will be reduced by 5%. Do note, that OC's MSA has been ranked #1 for highest risk by PMI for quite some time.





Translation: You need 10% down to buy a home in OC, period. Unless the appraiser is secretly the next Jack Kerouac, then I doubt any lender, Fannie Mae, or PMI is going to believe it is not a declining market, when several other data sources say otherwise. If you need to pay PMI, then you better have 10% down.





On an anecdotal note, I visited a non-Irvine new home development, where I know the sales agent. A sales agent I worked with, who knows I can't be BS'd. He straight up said, Fannie Mae has determined the area as a category 5 (ironic that is the worst of hurricanes), and you need to have 10% down.
 
I'm shocked this didn't happen a long time ago. If I were a lender I'd want more like 20-25% down in this declining market.
 
goods news................... less dumb people with no down money thus less buyer.... thus price will have to go down.



example..... i was scoping this detached condo list price was 399k. i made an offer of 380k with 20% down and and my credit score is in the 750. come to find out the bank accepted another offer at 410k. what the heck? later on did some more research and the buyer went in with 100% finance with 10k back for closing cost. i could not believe it but it happen.... 100% finance was still around. oh well............. no more of that crap now......
 
I was under the impression that none of the PMI companies were even offering PMI in CA anymore. The only PMI that I am aware of being offered is LPMI (lender paid mortgage insurance.) This just means the lender charges a higher interest rate.
 
eff, that CalHFA link was amazing. Says it was updated January 20, 2008...so it still seems valid. 100% LTV and 107% CLTV, minimum FICO 620 ( ??!!! ), <strong>only need 3 yrs away from a BK or <u>Foreclosure sale</u> with re-established credit history,</strong> open collections ( !!! ) under $1000 o.k., 45 % D.T.I. o.k. Are they crazy ?
 
Perhaps someone can clarify this to me about CalHFA...the max resale home price in OC is $596,217 (non-targeted, whatever that means) or $728k targeted.





Yet, if you look at their income requirements, the max for a 1 or 2 person household (moderate income) is $98,724, or $115,178 for 3 or more people.





So...you're getting someone making low $100s into potentially a $700k home?
 
Oh... yes... lovely CALHFA. I didn't check their rates, but they are below market, so lets assume 5.25% for this example. And, if the loan received an automated approval, you know, plug in the data into the computer, and it spits out an approval. If the loan was approved, the back end ratio could be as high as 55%, even for the interest only loan.





$596k loan.


$2608 a month mortgage.


$596 property taxes.


$125 insurance.


$500 other debt.


$3829 a month total, equals a 47% debt ratio.





$728k loan.


$3185 a month mortgage.


$728 property taxes.


$175 insurance.


$400 other debt.


$4488 a month total, equals 55% debt ratio.





Just don't sell too soon, CALHFA likes to have some of that equity, er if you have any.





A targeted area is where the majority 70% that live there, earn less than 80% of the statewide median income. Only two tracts in Santa Ana qualify.
 
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