Whitehouse Needs to get this Housing Crisis in Order

Conflicting messages from different parts of the government are not what we need during these challenging times.

February 26, 2009 -- BLOOMFIELD, MI - Anyone trying to follow all the latest updates from the government on what our leaders are doing to solve the housing crisis, is probably scratching their head wondering who's in charge.

It's looking more and more like no one at the top is in control and coordinating a cohesive plan.

Example #1: 

On February 4^th of this year, FNMA announced that they were bringing back appraisal waivers to assist more homeowners in taking advantage of historically low interest rates.

On February 17^th the President Obama announced in his Homeowner Affordability and Stability Plan that FNMA would allow homeowners upside down up to 105%, to refinance.

           Contradiction: How far was FNMA planning to ignore appraised values?  We'll never know now that the limit is 105%.

Example #2:

HUD is pressuring lenders for more conservative underwriting, resulting in lenders raising minimum credit score requirements for FHA loans to 620.

Obama's plan turns $7,500 tax credit loan into $8,000 true tax credit to increase home sales.

            Contradiction:  Obama wants to increase home sales, but HUD's shrinking the pool of eligible borrowers?

Example #3:

FNMA & FHLMC are raising there credit score and loan-to-value pricing adjustments.  A borrower with a 739 credit score will now have to put down 25% to qualify for the best interest rate.  Those with scores under 680 will have to put 40% down or pay a hogher interest rate.

On November 25^th of 2008, the Federal Reserve announced a program to reduce the cost and increase the availability of credit for the purchase of houses. Over several quarters, the Federal Reserve will buy up to $100 billion of direct obligations of FNMA, FHLMC & GNMA, and purchase up to $500 billion in mortgage-backed securities (MBS) that the entities sell on Wall Street. 

            Contradiction:  FNMA/FHLMC are effectively raising mortgage rates while the Federal Reserve is accruing debt obligations to lower rates?

None of this makes any sense unless someone at the top is a chess grandmaster and many moves ahead of the rest of us! 

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Drew Sygit is President of The Lending Edge and holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor.  He's spoken for HUD, has written numerous articles and is a mortgage industry advocate for loan originator licensing and consumer education.  He can be reached at 248-356-3739, dsygit@TheLendingEdge.com  or read his blog:  http://drewsmortgagenews.blogspot.com.