An Increase in FHA Loans Hints at the Return of First-Time Homebuyers

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Fannie Mae announced This Week in Real Estate an initiative intended to help make it easier for renters to become homeowners. On September 18, it will launch a new feature in its automated underwriting system that will incorporate consumers’ rent payments in credit evaluations. Only consistent rent payments will be considered, however missed or inconsistent payments will not negatively affect the applicant’s ability to qualify for a loan sold to Fannie Mae. Below are a few newsworthy events from the second week of August that influence our business: 

Lumber Executive Says Drop in Prices Has Reignited Demand For Building Projects. Lumber hit a low of $480.40 per thousand board feet, its lowest level since July 8, 2020, when lumber traded as low as $465 per thousand board feet. Lumber prices are on track for their 13th consecutive weekly loss after falling by more than 9%. The recent slide in lumber prices has rekindled demand after a massive runup earlier this year challenged the affordability of building projects. “Our renewed interest is now turning into actual orders and people placing business here for the second half of this year, most notably in the commercial segment and into the multifamily unit segment.” 

Fannie Mae Introduces New Underwriting Innovation to Help More Renters Become Homeowners. Fannie Mae today announced the company will launch a new feature in its automated underwriting system to incorporate consumers’ rent payments in the mortgage credit evaluation process. Beginning September 18, 2021, Fannie Mae’s Desktop Underwriter will enable single-family lenders – with permission from mortgage applicants – to automatically identify recurring rent payments in the applicant’s bank statement data to deliver a more inclusive credit assessment. For qualified renters who may have limited credit history but a strong rent payment history, Fannie Mae’s DU enhancement creates new opportunities for homeownership while promoting safe and sound lending. “Many renters believe they will never be able to buy their own home because of insufficient credit. We can responsibly expand mortgage eligibility by including positive rent payment history in underwriting risk assessments,” said Hugh R. Frater, Chief Executive Officer, Fannie Mae.

Weekly Mortgage Demand Hints at Return of The First-Time Homebuyer. Coupled with a continued increase in refinancing, total mortgage application volume rose 2.8% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index. “The higher level of purchase activity last week was driven by more government purchase applications, including a 3.3% increase in FHA loans,” said Joel Kan, an MBA economist. “With low for-sale inventory keeping home price appreciation in many markets at record highs, the jump in FHA purchase applications is potentially a sign that more first-time buyers are finding purchase options despite the high prices.” 

Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest
Real Estate is eligible to receive no-obligation home warranty coverage from American Home
Shield or 2-10 Home Warranty the first six months the home is listed with our company?

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