Seattle Bubble Forum Archive

Here's an e-mail from one of the loan officers at Bank of America.

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From: <someone>@bankofamerica.com
Sent: Thursday, June 05, 2008
Subject: Bank of America Mortgage

Hello,

I just wanted to check in with you regarding your home search. I want to let you know about the changes that have happened to our underwriting guidelines for the NO FEE MORTGAGE PLUS product. If you have been approved by June 6th, the minimum down payment required by Bank of America is 10% because King County/all of Washington and the entire country is now labeled as a declining market.


Declining markets A declining market is an area in which home prices are currently depreciating. Properties that are located in an area identified either by Bank of America or by the appraiser as a declining market, are not eligible for maximum financing. When this occurs, the maximum LTV for the product or program must be reduced by 5% for LTVs 80.01% and higher regardless of AUS (i.e. DU® / LP®) findings.
Bank of America will identify Metropolitan Statistical Areas (MSA) that are declining using the Case Shiller Weiss Home Price Index. Markets will be identified as declining if at any point in the next four quarters home price depreciation year over year exceeds 5%. The Home Price Index will be reviewed and updated quarterly. Properties located in a Declining Market are limited to 80% LTV for the following:

If you were approved before June 6th, you then have to have an accepted purchase contract and rate has to be locked by June 30th for being eligible to only putting 10% down. July 1st all declining markets now will have to put 15% down. What this means is for you to only put 10% down you have to find a home, your offer has to be accepted, and you have to lock rate by June 30th. It is ok to have a closing date in July and August.

If you are approved after June 7th, the minimum down payment is 15% down.

If you cannot find a home and lock in the rate by this short deadline then your only option for putting 10% down is a loan that requires you to have Private Mortgage Insurance (PMI). I wanted to inform you on these future changes. If you have any questions please let me know.



MY RECOMMENDATION

If you can only put 10% down then reply back to my email and schedule an appointment with me today or tomorrow to take an application and get approved before the June 7th deadline. Then you only have about 25 days to find a house and lock in the rate.

I apologize for the inconvenience but due to the economy Bank of America is taking these precautions to secure our bank as a whole.

This is a real e-mail.
I got it forwarded by a colleague of mine (who got it directly from an "Assistant Vice President, Loan Specialist - Mortgage and Small Business" at Bank of America).

Rhonda Porter would be a great person to hear from on this. As a mortgage broker I would expect her to get alerts about policy changes like this. However, if BofA doesn't use brokers then I suppose Rhonda might not get the news.

That's a retail program the email is referring to. In fact, BoA doesn't do wholesale anymore, so a broker would not receive any news from them.

Did anyone get a confirmation from BofA?

On May 16, 2008 Fannie Mae Announced Single National Down Payment Policy that Replaces Policy Regarding Markets Where Home Prices are Declining. The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences.

http://www.fanniemae.com/newsreleases/2 ... .jhtml?p...

This means that Fannie and Freddie won't buy loans that have less than 3-5% down.

Yes, banks can have stricter requirements, but most loan originators don't care about anything except being able to sell to Fannie and Freddie.

This starts to get a lot more interesting when you start talking about 1st/2nd combo loan packages, non-conforming 1st loans, and so on, because these more commonly end up being held by banks (except possibly for the 1st loan if it's conforming).

Sniglet, sorry I missed your comment--send me an email anytime if you want me to visit. I try to keep up and enjoy SB.

You're right about BOA, they pulled out of the wholesale markets for brokers and correspondents (we're correspondent) a few years ago.
It will be interesting to see what happens when they take over Countrywide and if that is another less lender in the wholesale arena. (CW has never been one of the lenders I prefer to work w/but this will impact many).

By now you know that Wells Fargo has declared King County as "soft" too...right?