Fannie Mae in trouble again….

New News…. apparently Fannie Mae, a corporate agency that backs conventional home loans, is apparently looking for more aid after posting another $15.2B in losses.   They are asking for $11B in government aid according to several news reports I read.  Fannie Mae already having been one of the largest recipients of government aid thus far!  Fannie Mae currently guarentees a wopping 31 million home loans out there worth an enormous $5.4 Trillion.  I understand that this equates to almost 1 out of every 2 homes in the US having loans having Fannie Mae backing.  The loss is driven by only 4% delinquent inventory due to $18.8Billion in credit losses… from measly 4% delinquency.  That’s how huge Fannie Mae has been allowed to get.   All of this, when HUD (department of Housing and Urban Development), a competitor of Fannie Mae is posting record numbers.  WHY?  Its a combination of factors….  FHA (backed by HUD) is the most attractive loan program due to the low downpayment requirement (3.5% vs. 10% / 20% for condos).  This is driving most homebuyers to seek out a government HUD backed loan.  In addition, HVCC appraisal requirements for conventional loans is hurting them greatly due to increased cost to borrowers and major funding delays.  FHA has never been looking better.

What does this mean to buyers in the San Diego Real Estate market?  FHA here we come!  The problem with FHA is that you either need to purchase in an already FHA approved condo development (which greatly limits your selection) OR try to get spot approval.  And I understand that spot approval may be going away after October of this year.  The loan market is tightening.