Last week, we discussed the Fed’s recent reductions in the Fed funds rate and the discount rate. We discussed how traders of US Treasury bonds and not the Fed determine the direction of long term mortgage rates. A few sentences from ratelink.com sum up the facts quite succinctly: “(Bond) traders are looking for confirmation that the economy is slowing and inflation is contained. Following the Fed’s 50 basis point cut, any data to the contrary may cause rates to move higher. Remember, a reduction in the Fed Funds rate is intended to spark economic activity which is often inflationary. Inflation erodes the value of money received in the future, which results in bond buyers demanding higher yields.” Simply put, bad news for the economy and bad news about economic growth, employment and spending means good news for long term mortgage rates. Good news about the economy cause fears of inflation to pop into the heads of bond traders. This translates into higher mortgage rates.

Also last week, after spending time enjoying the well researched articles written by locals Ned Dominick and Tom Wilson, I gritted my teeth to read the “Real Estate Matters” column penned by Chicagoan, Ilyce Glink. Whenever Ilyce Glink chooses to write about mortgage lending, she invariably gets it wrong. Last week was no exception. She blithely and ignorantly declared, “The number of lenders (other than the VA) offering zero down payment loans at the moment is close to zero….”

Gentle readers, every professional mortgage loan officer in the country has conventional conforming 100% loan to value programs up to a maximum mortgage amount of $417,000 available via Fannie Mae and Freddie Mac. You don’t have to have perfect credit to qualify (but you can’t have lousy credit either). The Fannie Mae programs are known as Flex 100 or My Community and the Freddie Mac version is Home Possible. The My Community and Home Possible programs have income limits, but reduced mortgage insurance requirements and expanded guidelines. The Flex 100 has no income limit. My Community and Home Possible also have flavors (Community Solutions and Neighborhood Solution, respectively) to further assist educators, healthcare workers, firefighters, law enforcement and military personnel in the purchase of a home.

The program income limits for persons on the application are the HUD Area Median Incomes (AMI) and are determined based upon the location of the property. The AMI for Houston County is $59,800. Bibb, Jones, Monroe, Crawford and Twiggs County’s AMI is $50,700. Peach County’s AMI is $47,200. Other county’s AMI is available at efanniemae.com. If your income exceeds these limits, just ask for a FNMA Flex 100.

Whatever amount this newspaper is spending on Ilyce Glink’s syndicated column is wasted money. Again, I would encourage any local real estate professional to offer up a real estate column for this section of the newspaper. You’ll only be paid the standard rate (zero dollars) for your efforts, but the readership would be much better served. So, if you’ve ever thought, “I can do better than that!”, step right up. That’s how it began for me.

David Griffin has been financing homes in Macon, Warner Robins and all of Middle Georgia since 1983. He is a two-time past president of the Mortgage Bankers Association of Middle Georgia. For an archive of past articles visit www.davidjgriffin.com. (9/27/07)