We could think of this as the latest effort to make Main Street feel more comfortable about the "assets" we are holding in Fannie and Freddie (and I guess that extra 700 Billion too)... but anyway you look at it, mortgage lending rules are getting tighter. See that guy balancing on one foot, on a tightrope while playing the fiddle at night? He's got it E-A-S-Y!
Effective October 10, 2008 Mortgage Insurance on Investment Property is no longer available. Period, End of Story - better have 25% to put down.
MI Companies are also tightening the Debt to Income (DTI)requirements - meaning that even though we can get a 95% loan approved through the Fannie or Freddie engines with a DTI of 45% or 50% (back ratio) - we might not be able to get mortgage insurance on the loan. Most MI companies are setting the standard for high LTV loans (90 to 95) at 720.
There are still TONS of loans available - and TONS of people who qualify... it's just getting a little more tricky. You definately need to be one of the smartest guys in the room if you are going to be a lender in today's environment!