Declining Market Values, Reduex

By
Mortgage and Lending with Union Home Mortgage Corp.
 

The mortgage business right now is a little like the weather here in Cincinnati.  If you do not like it wait five minutes it will change.  A few weeks ago we talked about declining market values and what steps we could take, if any, to prepare buyers and sellers upfront for the possibility of having the dreaded "Declining Market Value" message in DU/LP or noted by the appraiser. Now we are going to throw the baby out with the bath water!!!  In a recent publication Radian Mortgage Insurance published a list of areas that they consider to be declining market areas. It is 207 pages long and they have made it real easy to use.  Just type in your zip code that the property is located in and if it is on the list Radian has determined that this property is in a declining market value area.  Well, guess what? Type in any zip code on the Ohio side of the Greater Cincinnati Area and it IS ON THE LIST!!! Every Zip code.  In fact, if type in just about any zip code for any major metropolitan area in Ohio it will be on the list.  The same applies to many areas of Florida, California, Michigan, Massachusetts, Illinois, Iowa ( yes I said Iowa), Arizona etc, etc. Talk about overkill.  Basically what this says is that Radian will not insure any loan to the maximum LTV if it located in one of these areas.  So, if you have 100% buyer and the house is located in one of these areas you can only have a maximum 95% LTV. Other PMI companies have a list similar to this but they are far less extensive and probably more realistic in scope.  Why is this important.........

Now entering the arena are lenders who are starting to use this list ( US BANK) as the determining factor for determining max ltv due to declining market values.  Basically an appraisers professional opinion means nothing.  I know you are thinking it. I was thinking it too. No, it is not red lining because they are not saying they will not lend in these areas they just want extra money down.  I know the market has been crazy but the PMI companies can not make up the losses from the past years by going over board now.  The good news is that FHA is still a great alternative and does pay attention to some arbitrary list.

Your Mortgage Your Money

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