The Saint Paul Condo Blog

Wow, yesterday was a little more hectic than what I expected.  I took a ton of photos, so instead of doing my normal flash slide show, I thought I would upload them to a file sharing site (Picasa).  This way, you can see them all.  I will add to this album as the week goes on, and I would be willing to bet that Thursday is going to be another action packed day. 

She's here!  After months of waiting, our new daughter came into our lives last night at 7:32pm!  A healthy 7lbs, 5oz and 20 inches long.  Elise is now the little sister to our other beautiful daughter, Amelia who just turned 4 in July.  We are still at the hospital, but everyone is doing great!  We expect to be released tomorrow afternoon and will make the long and difficult 3 block drive home ;)

For those of you trying to reach me, I apologize, but I do have a good excuse!

NAR Statement:
What the Government Takeover of Fannie Mae and Freddie Mac Means to the Housing Industry
Washington, D.C. (September 8, 2008) - The federal government’s takeover of secondary mortgage giants Fannie Mae and Freddie Mac should cause a drop in mortgage rates in the short term that benefits
home buyers, but the long-term outlook is too early to call. NAR fully supports the action of the U.S. Treasury and the Federal Housing Finance Agency.

The federal government had no choice. The capital situation of the two companies was not enough to handle the fallout from
rising mortgage defaults in the near future. In addition, investors who purchase Fannie Mae and Freddie Mac debt have lost confidence
in the two.

In a statement, NAR commended the Treasury’s action, announced yesterday, to bring stability and continued liquidity to the mortgage market. “The plan will help restore confidence in the secondary mortgage market,” said NAR President Richard F. Gaylord. “We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers.  We look forward to working with the administration and Congress to ensure the continued vibrancy of the secondary mortgage
market.”

Summary of What the Treasury Did and What It Means
In the takeover, Treasury placed the two government sponsored enterprises (GSEs) into a conservatorship — similar to a Chapter 11 bankruptcy — which fully protects taxpayers from conflicts of interest between taxpayers and shareholders or current management.

The federal government is authorized to take up to an 80 percent stake in the companies, will review their financial condition quarterly, and inject money into the operations as needed. That means the market for GSE securities will be treated more like Treasury obligations, which should push mortgage interest rates down. That, in turn, is expected to speed up home sales and help stabilize home prices.

The GSEs will be allowed to increase their mortgage funding over the next year and a half to help stabilize markets. Starting in 2010, the plan calls for them to reduce their portfolios.

The heads of Fannie Mae and Freddie Mac have been relieved of their duties.  Treasury selected Herbert Allison, former Merrill Lynch vice chairman, to lead Fannie Mae, and David Moffett, former U.S. Bancorp CFO, to guide Freddie Mac.

www.Realtor.com

With the Fannie Mae and Freddie Mac bailout, we have received better interest rates!  Today’s rate was 5.75% for well qualified buyers.  What do I mean by "well qualified buyers", well since the housing meltdown started, the banks have been getting tighter and tighter on who they will loan money to.  It used to be that with a mid-600 score, you could still get the best rate offered with little to no money down.  Not anymore.  Now to qualify for the a+ rate, you will need money down (20% or more) and have a credit score of 740 or better.  Does this mean if your score isn't 740+ you won't be able to get a loan?  No, it means you might have to pay a little bit of a premium if you don't meet the 20% down or the 740 score.

Then there is FHA.  FHA allows for a lower score and less down payment, but the mortgage insurance never goes away (usually around $150 a month).  On a conventional loan, once you can prove 20% equity in the property, you can have it removed by using a certified appraiser.

In the condo and loft world, FHA is a little more difficult, as almost none of the buildings are approved for FHA financing.  There is hope though, and it’s called a Spot FHA approval.  If the building meets the requirements of FHA, they will approve a one-off transaction.

Part of the requirements FHA has for their spot program is the building's condominium documents must meet federal housing non discrimination standards (which I believe every building meets), there cannot be any first right of refusals (meaning the building gets the option to buy your place if you decide to sell, again no building in downtown has this in their docs to my knowledge) and the building cannot have any more than 10% of units of the building financed by FHA.

If you are working with a lender that says it can’t be done, then find a new one.  I’ve had clients tell me their loan officer can’t or won’t do spot FHA for condos, as it’s too difficult.  I have two great loan officers that I could recommend for you that know their way around Spot FHA financing.

After a wild week, I can now say "it's back to normal" here in downtown!  All in all, I think Saint Paul shined in the national spotlight.  Even the national media commented on how nice and polite everyone was.  I took a lot of pictures of the event, mostly of the protests, because that's what this realtor has security clearance for ;)  If you want to see the full collection, here it is.  http://picasaweb.google.com/stpaulguru

I will say, that I hope we don't host another political convention next election cycle.  Maybe just a little too much excitement for me.  But I guess that is why I prefer Saint Paul to Minneapolis.

For those of you who know me well, you probably know that Leslie, my wife is expecting our second child any day now, so if my blogging falls off for a little bit, you will know why!