Countrywide Classifies Daytona Beach Real Estate as Soft Market

Countrywide Changes The Rules

Both Volusia (Daytona Beach, Ormond Beach, Port Orange, Deland and surrounding areas) and Flagler (Palm Coast) Counties home markets have been classified by Countrywide, the mortgage lender, as category 5 counties in their soft market categories list. The scale for risk goes from 1 for the most stable markets to 5 for those markets with the greatest risk of decline.

This means that Countywide considers loans issued in the Daytona Beach area to be at the high end of the risk scale. What does this mean to home buyers:

• If you are getting a mortgage for a new or existing home through Countrywide, the amount that Countrywide will loan against the value of the home is reduced by 5%.
• If you are getting a home equity loan through Countrywide, the maximum amount that Countrywide will loan against the value of the home is reduced by 10%.

These rules went into effect on January 18, 2008. Unless you were locked by that date, your loan will fall under the new rules. However, the following is from a letter that Countrywide sent to business partners: “The new Soft Market Policy is effective on all loans locked after Friday, January 18, 2008. Loans locked prior to the end of day on Friday, January 18, 2008 are not subject to the new policy. Those loans must meet all pre-existing Soft Market Policy requirements and must fund by March 18, 2008.” The way we read this is that if your pre-January 18th loan is not closed by March 18th, the loan will be reduced by 5%, forcing you to pay an additional 5% down.

The follow Products / Programs Not Impacted:

• FHA / VA
• Rural Housing
• Bond programs using government or Rural Housing loan programs
• Reverse Mortgages

Whether you are dealing with Countrywide or any other lender for your mortgage, be careful. Learn all the details of your loan and any changes that are in the pipeline. Large companies often follow each other, so others may adopt the same strategies.

We will continue to provide you with news related to Daytona Beach area real estate markets. It’s important that we are aware of both good news and bad news. We can’t be sure how changes such as Countrywide made will change the value of homes for sale in the Daytona Beach area. Countrywide is taking these steps to reduce risks, and based on recent market performance, defaults and foreclosures, we’re sure this move makes sense to them. However, they are still loaning up to 90% of home value. It appears that they do not believe that there will be a catastrophic drop.

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