Sunday, May 24, 2009

Fannie Mae Raises Costs of Condo Loans

Mortgage rates and house prices are down, but underwriting changes that took effect in April are throwing new hurdles in the way of borrowers, according to Ken Harney in the Washington Post.

For example: On all condominium loans, Fannie Mae now has an across-the-board three-quarters of a point, no matter how high the applicant's credit score. For a once-popular "interest-only" condo loan with a 20-percent down payment and a borrower credit score of 690, Fannie imposes the following ratcheted sequence of add-ons:

One-quarter of 1 percent as an "adverse market" fee; another 1.5 percent for the below-optimal credit score; three-quarters of a percent for the interest-only payment feature; and three-quarters of a percent because the property is a condo. The total comes to 3.25 percent extra, which can be paid upfront or rolled into the rate.

For the complete article, click here.

No comments: