TOP 5 IN REAL ESTATE, December, 2009—If you serve the corporate relocation market you may be aware of yet another challenge this population faces. Because of changes announced in June by Fannie Mae (FNMA), the largest mortgage purchaser in the country, transferring families’ purchasing power could be significantly impacted.
FNMA’s June 8th Announcement cites it will now disallow inclusion of secondary wage earner’s projected income in loan qualifying income ratios. Fannie Mae has in the past allowed “trailing secondary wage earner income” when determining housing affordability prior to a spouse or partner securing a position in the new location, but has now eliminated this policy.
Dual income families comprise about 70% of all corporate transfers so FNMA’s policy change may impact affordability for many whether purchasing or selling in corporate neighborhoods. For dual income families who rely on both a primary and secondary income to maintain lifestyle, securing employment at the new location in this economy may prove especially challenging.
Previous to this ruling, real estate agents and corporate administrators alike have seen many effects of this market: declining transfer acceptances, sluggish home sales, tightened mortgage lending and lengthier stays in temporary housing. Fannie Mae’s new policy may only reinforce these scenarios for certain corporate transfer populations.
To maintain mobility goals corporations must align relocation policy support with transferring family needs while keeping company objectives in mind. Employers should reevaluate relocation policy assistance periodically – especially when significant market changes in housing and mortgage markets occur, but not all do.
How can real estate agents support transferees’ buying and selling strategies?
Real estate agents are in an influential position in both the early inbound or outbound relocation phases and can help prepare transferring families for smoother passage ahead.
For corporate buyers, awareness and preparation are key:
• determine if your client is affected by the ruling and create awareness of its potential impact during pre-decision or familiarization trips to the new location
• if not already required by employers, urge mortgage preapproval prior to actual house hunting activities
• if not already provided by employers refer spouses/partners to employment assistance counselors and recruitment offices early in the process.
• research alternate lending sources having the ability to portfolio loans or sell to other investors.
For corporate sellers support may mean enhancements for their dual income buyer prospects. Agents’ price opinions and market reports should indicate if potential prospects are likely to be inbound corporate transfers who could potentially benefit by seller-provided incentives.
Appropriate marketing strategies in support of these buyer profiles could include assistance or incentives such as a:
• temporary mortgage rate buy down
• portion of buyer’s closing costs
• credit for first three mortgage payments.
While these seller-assisted incentives won’t change FNMA guidelines, it may attract buyers’ attention while offering a bridge of support until ‘trailing’ income materializes.
Some corporate employers already provide this type of assistance within home sale assistance policies, but many are not yet tuned into supporting seller-offered financial incentives for home selling transferees. In a market of multi-tiered challenges employers may be more receptive to allowing certain exceptions to support sales opportunities and perhaps also avoid another inventory property.
Often a real estate agents’ ability to target and meet the specific needs of buyers and sellers in the home search and marketing processes can significantly influence the success of a corporate relocation.