Fannie Mae and Freddie Mac have posted several counties and cities in the state of Virginia (as well as several states in the nation) as listed in a declining market area. The counties in Virginia are Alexandria, Arlington, Clarke, Fairfax, Fairfax City, Falls Church, Fauquier, Fredericksburg City, Loudon, Manassas, Manassas Park, Prince William, Spotsylvania, Stafford and Warren.
What does this mean to you? Conventional loans (excluding My community) in these areas will have the LTV reduced by 5%. This means that if your borrower had only intended on putting 5% down payment, he will need 10% down payment instead. The good news is that as of right now, FHA, VA and the affordable housing products with Fannie and Freddie have not adopted this policy (this is changing on a daily basis, please check www.efanniemae.com www.fha.gov www.freddiemac.com for continuous updates). VHDA (www.vhda.com )is still in the process of publishing guidelines on this, but they will probably adopt the Fannie/Freddie policy as well.
This is a temporary restriction that will be lifted, however there is no date or time frame promised as to when this will happen.
Also new for 2008, Risk based pricing for conventional products. Borrowers with lower credit scores will experience an add on to the points as follows:
Below 620 (or missing credit score)
2.00%
620-639
1.75%
640-659
1.25%
660-679
0.75%
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