Localism: Did Banks/Lenders not get the Memo?

I just saw a post written by the senior editor at large of Fortune Magazine.

On the surface he is claiming that the rich and upper middle class are getting a break in the stimulus package due to the raising of conforming limits. (In some areas of the country as high as $729,750)

There is one small, insy, teensy problem with this assessment. Banks and Lenders missed the memo!

They have followed FNMA guidelines rather well. They have created a new class of loan - the Jumbo Conforming Loan. Don't they know they were supposed to play ball? They weren't supposed to take advantage of this and make loan officers jobs harder?

This was supposed to be a stimulus package. The Federal Government, better said FNMA, was given direction to help out.

ok - perhaps a few examples would be good.

Before the stimulus package was passed - any loan over $417,000 had a rate premium added to it. Yes, there a wide variety of reasons - probably the biggest was the "credit crunch" that occurred mid 2007. Since that time jumbo loans (anything over $417,000). For example - one particular rate sheet from Sept 07 had a par rate of 6.5 % on a 30 year fixed for Conventional Pricing. For Jumbo pricing the par rate was 8.25. A difference of 1.75%.

Fast forward to today - Conforming pricing on a conventional product for under $417,000 is 6%, for the over $417,000 it is 7.5% - a difference of 1.5%,

The banks don't get it. I guess they are thinking - hmm, let's see if the general public is paying attention. Well, my banker - I am paying attention. I care for my customers and you are mucking it all up.

"I'm mad as hell and I'm not going to take it anymore!" - Network

btw - here is the article that set me off - By Allan Sloan

Posted Thursday Apr 17

(04/17/08 02:57PM) — Rich Sweum

I think that it is the investors in the TBD market (those that purchase mortgage backed securities) that are "mad as hell and they are not going to take it anymore!" The demanded that these conforming jumbos be kept separate from the conforming pools of securities, and they want "risk based" yields associated with those larger loan amounts...wouldn't you?

Look at how the package was written...to help the banks! They could clear off billions of dollars of formerly jumbo loans off their books (loans written back to July 2007)...that doesn't help me or you out. Everything done thus far has helped the banks, no one else. Hope Now is a a joke, FHA secure...a double joke.