Spotlight on bright side of mortage market
By: Kenneth R. Harney

Credit squeeze, credit freeze, credit-system seizures: Everybody knows how severe and painful the global financial
breakdown has been, with banks unwilling to lend even to other banks.

But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment?
Or with a credit score below 720?

Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light
there than in most other financial sectors. Consider these facts:

• There is no shortage of money for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because
the mortgage market effectively has been federalized — at least for the time being.

More than 90 percent of new loans now are being made through the Federal Housing Administration (FHA) insurance
program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating
under federal conservatorship.

All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed
by the Treasury.

Ginnie Mae, which is FHA's pipeline to the bond market, recorded an all-time high of $29 billion in new mortgage-backed
securities issued in August.

• Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent
after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private
mortgage insurance.

FHA's credit standards are generous and forgiving; the agency exists to help people with less-than-spotless credit histories.
Fannie Mae and Freddie Mac have raised their credit-score requirements over the past year, but buyers and refinances with
scores in the upper 600s can still qualify for loans having reasonable rates and fees.

• Despite the global financial system's quakes, mortgage rates not only remain low by historical standards but have actually
declined.

For the week ending Oct. 8, according to the Mortgage Bankers Association, average 30-year fixed rates nationally dropped
to 5.99 percent, and 15-year mortgages averaged 5.71 percent. Freddie Mac said 30-year rates dropped to 5.94 percent.

• Maximum loan amounts through FHA, Fannie and Freddie in high-cost local markets on the West and East coasts, such as
Seattle, continue to be $729,750 through December. In January, the high-cost maximum is projected to dip to approximately
$625,000.

• Home prices — pushed by foreclosures and short sales — have rolled back to 2003 and 2004 levels or lower in many
former boom markets.

---

Sean Bova
Director of Marketing
Norris Homes, Inc.
www.norrishomesinc.com