All Eyes On Fed-Back Program Ending March 31st

We have been keeping a close watch on mortgage rates with the March 31st deadline approaching. Rates have been kept down by the Fed’s $1.25 trillion program to buy up mortgage-backed securities issued by both Freddie Mac and Fannie Mae. That program is scheduled to end March 31st - this coming Wednesday. Rates on a 30-year mortgage had fallen to a low of 4.71 last December and has remained around 5% since then.

This week, mortgage rates on a 30-year fixed moved slightly higher to 4.99 but remained just below 5 percent. Many are concerned that mortgage rates could rise once the program ends, weakening the fragile recovery in housing and the overall economy. Once the Fed-based funding ends, these mortgage bond giants will be dependant on private funding. The looming question is whether private investors will demand a higher rate of return for their still somewhat risky mortgage bond investment. If that becomes the case, mortgage rates could climb quickly.

In addition this week, the average rate on a 15-year fixed-rate mortgage was 4.34 percent, up a bit from 4.33 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.14 percent, up from 4.09 percent a week earlier.

Rates on one-year, adjustable-rate mortgages rose to 4.20 percent from 4.12 percent.

Fannie Mae's "Special Approval" Designation

Buyers of Florida condominiums have been finding it more restrictive to get lenders to finance their purchase... even if they are more than qualified financially! That is why it was such good news that Fannie Mae announced last Thursday that it would comprehensively review hundreds of condominium projects in Florida. Through a new “Special Approval” designation, Fannie hopes to streamline mortgage approvals for projects that don’t currently fit Fannie Mae guidelines even though they present limited risk to the company.

Florida Realtors strongly urged Fannie Mae to revisit its lending program in the condo market, and as a result it consulted a number of Florida Realtors as it developed the program, including Florida Realtors® Vice President Summer Greene. “This is good news for Florida and a step in the right direction for the state’s condominium market,” Greene says. “Hopefully, with the special approval designation process, we can begin to get our condo inventories reduced and absorbed as more condo buyers receive a green light from lenders for loans. This will help boost confidence in the market.” *

Fannie Mae and its cousin, Freddie Mac, back more than half of all U.S. mortgages. As the Fannie Mae initiative develops and gains momentum, Greene hopes it provides incentive for Freddie Mac to follow suit.While Fannie Mae currently has boilerplate guidelines for approving condo loans, it will sometimes grant a mortgage to a non-conforming condo if requested by a lender. The Special Approval designation takes that a step further by approving exceptions before a lender request has been submitted.

A dedicated team of six Fannie Mae professionals based in Florida will now examine statewide condominium projects that may not currently meet Fannie Mae’s standard eligibility criteria and assessing specific criteria more closely. The team will look at a condo project’s occupancy level, association dues, financial stability and property condition. If a project is deemed sufficiently stable following a closer examination, it will be granted the Special Approval designation, freeing lenders to originate and deliver mortgage loans secured by Fannie Mae. Projects deemed eligible will be listed on www.eFannieMae.com, and qualified borrowers will be eligible for financing.

This is big news...

*According to the National Association Of Realtors