All properties in 92101, previously considered as being geographically located in a “declining market” since last December by Fannie Mae [1] and Freddie Mac [2], will no longer be stymied with this stigma. 

What does this mean for you? 

If you happen to be shopping for a downtown condo, your lender will no longer have to ease you into the idea that a higher down payment will be required for your loan to be approved under Fannie Mae or Freddie Mac loan guidelines.
 
According to the May 25th 2008 article in San Diego’s Union Tribune entitled Fannie, Freddie scrap declining-market label:  “Starting June 1, mortgage applicants who are underwritten by Fannie Mae’s automated system online will qualify for 3 percent minimum down payments, wherever the property is located.  Borrowers whose applications require “manual” underwriting will pay 5 percent minimum down.” 

Fannie Mae indicated that it was able to move away from the declining markets policy because their latest version of Desktop Underwriter (DU) ver 7.0 will limit risk layering and assess each loan more precisely.

The rest of this article makes mention of private mortgage insurance (PMI) industry which has not yet removed the declining market label from their vocabulary.  PMI is an additional monthly cost associated with Fannie or Freddie loans generally greater than 80% of the home’s value.  One traditional way that homebuyers have avoided PMI is to offer 2nd mortgages or Home Equity Lines of Credit (HELOCs) for the amount financed above 80%.  There is still a shortage of these types of 2nd available to borrowers in today’s mortgage marketplace.  Nevertheless, removing the “declining market” stigma is a step in the right direction for 92101downtown condo financing in general.

A prior article written on April 27, 2008 in the San Diego Union Tribune entitled Declining market tag may threaten recovery offers more detail about the previous impact of the “declining market” stigma.

For more information concerning this article or questions about condo financing in general, please contact Pete Thistle at pete@92101urbanliving.com  Pete is a licensed broker with 92101 Urban Living.  Pete also has many years of previous experience as a loan officer focused on downtown condo financing with Wells Fargo, Countrywide, and American Mortgage Express.