New foreclosure rules as of 4/30/08

We just got word that the market will tighten a little more...not surprising in this "pendulum financing" reactionary market!

According to American Banker, as of the end of April Fannie Mae will adopt higher minimum down payments and credit scores for borrowers with a past foreclosure. They've already changed the minimum time period from four to five years for borrowers to re-establish their creditworthiness for those who have had a foreclosure. Some exceptions may be made for hardship, but don't count on leniency from the government. They're are hard-pressed as the rest of us. They're stretched to the limit...and beyond!

The plan is to be to treat those who "walked away" from their homes differently than those who have the ability to meet their obligations. The government wants to make it more difficult for those borrowers who made no attempt to meet their financial obligations. Not a bad idea!

The other change in the works is tightening the ability to transform primary residences into rentals and then purchasing new homes. I want to know more about that proposal.

I say if you don't HAVE to sell a home, don't. The government can't stop you from owning as many homes as you want. The problem is in the financing disclosures. Those who buy under the pretense of owner occupancy and subsequently treat it as an investment are circumventing the system. That will require additional documentation and possibly regulation.

Let's be careful and not fix this one with a sledge hammer....we're already seeing that pendulum regulation isn't good for anyone!