If there was any doubt regarding the government’s ever increasing role in underwriting home mortgages, these numbers should put those issues to rest. In August, Ginnie Mae (Government National Mortgage Association), the federal government agency that writes mortgage insurance for FHA and VA loans, had one of its best months ever. The private mortgage insurance companies saw a drop in business of over 40% (comparing August ’08 to August ’09.)
I have been reporting for months that Fannie Mae and Freddie Mac and the Mortgage Insurance companies have continued tightening the loan guidelines that lenders must follow for conventional loans. These guideline changes have resulted in higher down payment and credit score requirements and increased scrutiny of appraisals.
Until the last few years, government loans were a last resort for most homebuyers. The future suggests that for many homebuyers, FHA, VA and USDA-RD will be the first option, followed by local lenders who may not be subject to these conventional loan restrictions.
All of this is discussed in my book, Homes, Buyers and Mortgages or you can follow this on my website, homesbuyersandmortgages.com.
