Fannie Mae Scraps Declining Markets Policy

Daily Real Estate News May 16, 2008

Fannie Mae will no longer require borrowers to put up an extra 5 percent down payment when purchasing homes in areas deemed "declining markets," the country’s largest secondary mortgage market company said Friday.

Fannie Mae had been hearing concerns from REALTORS® and others for months that its declining-markets policy was bad for the housing market because it discouraged consumers from buying homes in markets hardest-hit by foreclosures.

"It stigmatized communities with lower sales and prices," said Dick Gaylord, president of the NATIONAL ASSOCIATION OF REALTORS®.

NAR met several times this spring with Fannie Mae officials and sent letters reflecting members' unease with the policy. “We heard the concerns of NAR and we reviewed and determined that changes in our policy were needed,” Gwen MuseEvans, Fannie Mae vice president for credit policy and controls, said in a statement Friday.

Fannie Mae's announcement comes as more than 8,000 REALTORS® are gathered in Washington, D.C., where Fannie Mae is headquartered, for NAR's 2008 Midyear Legislative Meetings & Trade Expo.

Under the policy change, borrowers can get loans up to 95 percent loan-to-value, even in markets in which prices have been falling. Prior to the change, borrowers could only get loans up to 90 percent to give lenders a 5-percentage-point cushion to protect against possible price declines in the future.

“This new down payment policy reinforces our goal to support successful home-owning,” says Marianne Sullivan, Fannie Mae's senior vice president of credit policy and risk management for single-family homes.

The new policy takes effect June 1.

— By Robert Freedman for REALTOR® magazine online

Young professionals tout Detroit living, business opportunities

By Rober Ankeny, Crain’s Detroit Business

“Positive attitudes will bring positive results” was how Ron Angelocci, senior vice president of Advance Strategies Group Inc., summed up the hour-plus panel discussion at Wednesday’s Business over Breakfast in the Renaissance Club.

Sponsored by Crain’s Detroit Business, the event featured a panel of four young professionals, each of whom had been saluted in Crain’s 20 in the 20’s feature in the past three years.

Michelle Darwish, Crain’s Business Lives editor who moderated the event, asked the young entrepreneurs to explain why they chose to live and pursue creative careers in Detroit, and how the city and region could best attract and retain more young talent.

All said that using organization resources such as those of the Detroit Regional Chamber, Detroit Metro Convention and Visitors Bureau and the Detroit Economic Growth Corp., plus networking with colleagues and friends is key to career success.

Austin Black, a Realtor with Max Broock Realtors and president of the City Living Detroit Web site, said he educating friends and co-workers about opportunities in the city can offset the “anywhere but Detroit” attitude frequently voiced by the city’s detractors.

“I had no intention of returning to Detroit,” said Black, a graduate of Birmingham Seaholm High School and Cornell University who has lived in Washington, D.C., and Italy. “But then I saw the chances in the challenges.”

Phillip Cooley, co-owner of Slows Bar BQ and a general contractor of Detroit-based O'Connor Development Group L.L.C., who has a fine arts degree from Columbia College in Chicago, said he too welcomed a challenge in a neighborhood that needed help.

He got support for his restaurant from other Corktown business people by networking, Cooley said. His business has “unexpectedly done triple our projections,” and he is opening a carry-out and catering branch of Slows next year in Midtown.

Eric “Dusty” Duistermars, a senior associate at UGL Equis Corp., is president and founder of Detroit Office Inc., a nonprofit that offers information for businesses considering office or commercial space downtown, and is modeled after Black’s residentially oriented City Living Detroit.

Jeanette Pierce, information director for Inside Detroit, was also raised in Detroit, graduated from Aquinas College in Grand Rapids, and lived in Spain before returning to the city.

Specializing in tours of Detroit, Pierce said employers should show potential recruits what the city has to offer, including “150 restaurants and bars in walking distance of downtown, art galleries,” and theaters with a total of 13,000 seats.

All agreed that Detroit and Detroiters need to stress Detroit’s growth and urban advantages, including entertainment, sports, arts and job opportunities, to educate residents in southeast Michigan and beyond, offsetting negative stereotypes.

A test of how positive messages work came when Darwish asked: “What did your parents say, when you decided to move into Detroit?”

Black said his mother, who lives in Troy, now wants to move downtown.

Pierce said her parents stayed in Detroit, and brought her “downtown to every event” as a child.

Duistermars, who grew up in Holland, said his parents visit him frequently, for Detroit events.

Cooley said his parents, who helped finance his restaurant, were “half-excited and half-concerned,” but have also moved downtown.

http://www.crainsdetroit.com/apps/pbcs.dll/article?AID=/20080507/REG/633075943/1069

Life in the big city!

Warmer weather and higher gas prices have caused many of us to rethink our daily routines, myself included. Per usual, I have attended various events and patronized many establishments downtown over the last two weeks. What made the last two weeks unusual, was that fact that I did not drive once in order to attend these gatherings. Instead, I either biked or walked the mile to downtown. I believe flexibility epitomizes the very best of urban living in Detroit-not only are there fantastic places to hangout and many happening events that occur during the springtime-but most are readily accessible by walking, riding, or hopping-on the People Mover for those lucky enough to be living in downtown Detroit. That is why I am always encouraging people to give urban living a try-people are always amazed with how much is available just steps from their door. The Riverwalk, too, is fast becoming the destination of choice for lazy May strolls along the river, so don't miss out!

In other news, I am pleased to announce that I also left my SUV at home, and took the bus to work for the first time last week. It took me from downtown Detroit to downtown Birmingham in 45 minutes, nearly door-to-door! The service was efficient, the ride was pleasant and the price was right, especially when compared with the prospect of paying $4.00 per gallon of gasoline. It felt great being able to conduct business as usual-going to the office, meeting friends for a drink at Mosaic-without having to drive (or park) my car. This freedom also reminds me why I love big cities so much, including Washington, D.C. and Rome, Italy, where I had the privilege of living before. These are just some of the advantages of living in Detroit nowadays that perhaps you haven't considered, and it is the icing-on-the-cake in today's buyer's market, where real estate deals abound for the savvy consumer.