On this week’s episode, David and Brian Wickert discuss the housing market in Southeast Wisconsin, giving you everything you need to get into the home of your dreams.

This week on the Accunet Radio Show:

Brian and David Wickert explain the Trump administration’s impact on the mortgage industry, the changing Fannie Mae and Freddie Mac income limits, and compare national housing trends with the SE Wisconsin market.

This week’s highlights

• Effective Thursday, Sept. 5, 2019, the maximum allowable income for standard WHEDA programs are dropping from $94,645 for a 1-2 person household to $65,840.
• Effective Sunday, September 1, 2019, you are no longer able to do cash-out refinances on an FHA loan.
• The Wisconsin housing market is a bit of an anomaly compared to national trends; While coastal cities are experiencing a buyer’s market, we continue to enjoy a strong seller’s market in certain price ranges.

What impact does the government have on the mortgage industry?

For the last few years, the Trump administration has been working to shrink the federal footprint in the world of mortgage lending. Here are four of the biggest changes they’ve made in the industry so far:

1. WHEDA income limit drop

This Thursday, September 5th, marks a drop in the income limit for WHEDA participants. Until Thursday, the limit for a 1-2 person household is $94,645 — then it drops to $65,840. To put this in perspective, between 30-35% of customers who took advantage of WHEDA in 2019 would no longer be eligible after the change.

2. No more cash-out refinances with FHA loans

On Sunday, September 1st, the rules on refinances with FHA loans changed. You used to be able to do a cash-out refinance on an FHA-borrowed loan of up to 85% of your home’s value. Now, that number has been sliced to 80% of your home’s value; the same as Fannie Mae and Freddie Mac.

3. Fannie Mae and Freddie Mac income limit drop

Earlier this year, Fannie Mae and Freddie Mac changed their income limits for moderate-income programs from $77,300 to $65,840. This mainly affects the HomeReady® and Home Possible® programs, which are tied to the median area income for 30-year fixed-rate financing.

4. Privatizing Fannie Mae and Freddie Mac

So, this actually hasn’t happened yet. But the Trump administration has announced a plan to re-privatize both enterprises. In addition to privatizing, there are a couple other ways they might try to shrink Fannie and Freddie’s footprint:

1. Congress can pass legislation (which is unlikely before the 2020 election)
2. The Federal Housing Finance Authority (Fannie and Freddie’s governing body) can change the rules. The income limit changes are an example.
3. They can change what kind of loans you can get using Fannie and Freddie. In our estimation, they’d probably eliminate investment properties, vacation homes, and cash-out refinances — or they’d increase down payments on second homes.

Moral of the story: If you’re thinking about buying a home, sooner is better than later; Rates are great, but the mortgage industry can change overnight (literally).

Listener question: National vs. local housing market 

“Can you comment on the differences between the Southeast Wisconsin real estate market compared to coastal markets?”

The coastal buyer’s market has been widely reported on and misrepresented as reflective of all markets. Just like politics, real estate is local; While coastal cities might be experiencing a buyer’s market, SE Wisconsin continues to see a strong seller’s market in popular price ranges.

Now, this can change based on home price. More affordable homes sell quicker than, say, a $750,000 home that hasn’t been updated in 15 years. Likewise, affordable housing is a continued issue facing SE Wisconsin (and America in general).

Part of the problem is that builders can’t afford to build affordable homes. There are scarce lumber, labor and land, and since builders get paid by taking a percentage of the sales price, there’s pressure to build more high-priced homes than the market demands.

Have a question during the show? Call or text us at (414) 799-1620 for a chance to have us answer on-air!

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