The Stimulus Package might actually help... The Senate kept the language in the Rebate and Economic Stimulus package that raises the loan limits for FHA, Fannie Mae and Freddie Mac. THIS IS VERY good news for thousands of people seeking financing this year!
We believe that this should bring additional activity for home above the $500,000 mark in our area because borrowers will have a 12 month window for EXCEPTIONALLY good interest rates (Jumbo interest rates are usually a full percent of interest or more higher than conforming interest rates). If you hold an Adjustable Rate Mortgage on a second home, for instance, this is could be a great time to refinance at CONFORMING RATES!
Actual wording from the Bill:
III. Other Provisions Increasing Affordable Refinancing Opportunities and Liquidity in Housing Market. The proposal would raise FHA's loan limit - the dollar amount of a mortgage that FHA can insure - for its single-family program from 87 percent of the conforming loan amount to as high as 175 percent (effectively $362,790 to $729,750) of the conforming loan limit in certain geographic regions where the cost of housing is and from 48 percent to 65 percent (effectively $200,160 to $271,050) of the conforming loan limit in less expensive markets. FHA would also have the authority to raise those loan limits by up to an additional $100,000 if market conditions warrant such increases. To enhance credit availability in the mortgage market, the measure also includes an increase in the loan limits for single family homes from Fannie Mae and Freddie Mac from $417,000 up to $729,750 that covers loans made between July 31, 2007, and December 31, 2008. The proposal expires on December 31, 2008. The proposal is estimated to cost less than $50 million in 2008 and less than $50 million over ten years.
If you know of someone who needs educated information about their mortgage options, please call us!
Steve and Eleanor Thorne
919-649-5058
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I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes and factors that affect rates!
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I believe you're right. This should be featured in order to have the greatest exposure for the widest audience today. If that happens, congratulations in advance of the event!
Mike in Tucson
Morning Mike! Thanks for star!
Eleanor,
That "$500,000" puts a Buyer in a pretty sweet spot in Wake County. A decent interest rate is certainly appealing.
Eleanor, I am with you this will help a lot of people. I know my phone rang last night from a client looking to refinance.
Eleanor - Does this mean that the package is now in effect?
Penny! The president is scheduled to sign the bill next week! Shouldn't take too long!
I believe you are right too. I does open a tremendous window for many people.
Hi, so I take it this has not passed as of yet? This is one of those few moments that comes along every 5 or so years that is amazingly good for the industry. Lets hope this bill does get passed!!!
Thanks for posting!
Jason C. Sheppard
TruClose Financial Services, LLC
I believe these limits will be capped at 125% of the median price of a home in the specific area, capped at $730.
If this is true, then I estimate only about a dozen areas in the country would have a cap as high as $730k...probably half in California. Some areas it would not impact at all.
If someone knows the actual way it was passed yesterday, please inform us.
This is very good news. I think this will receive final approval next week.
I just updated the comments to show the actual wording.
Thank you so much!!! Great post!
As far as the areas I believe it will be beneficial to, NJ, FL, CO and NY are a few that come to mind that I would add to CA. Anywhere that has values that qualify for jumbo loans as well!
Thanks again!
Jason
I saw the House and Senate folks patting themselves on the back yesterday. I'll wait until the Pres. signs it and then take a look, then find out what it means to buyers in my area.
Eleanor: Well done. It's the news about Conventional guidelines that excites me. That would be amazing. So the question is, if the President signs, how long until it's implemented? I get conflicting answers on that.
St paddies day is when I think this will be in effect. I think the primary purpose of this (hence the backdating to July 2007) is to allow lenders to unload nonconforming paper that there currently isn't a market for on the secondary market - freeing up cash and improving liquidity of said lenders? This will have a huge impact on the consolidation of mortgage companies and banks.
I'm with you Elanor. I hope this moves a few homes. Every little bit helps.
I just received this....
Over 400 NAMB members spent the day yesterday advocating and informing their legislators in the House and the Senate on the issues affecting our industry. At the close of NAMB's advocacy day, Congress passed with overwhelming support an economic stimulus package that will now provide relief to millions of homeowners.
The stimulus package, which is expected to be signed by the President as early as today, will temporarily increase the conforming loan limits of Fannie Mae and Freddie Mac (GSEs) allowing them to now purchase loans up to $729,750 in the most expensive parts of the country, such as California and Massachusetts. The package also temporarily increases the FHA loan limits up to the same amount, depending on locale. Further details will be sent to you after FHA and the GSEs determine the exact loan limits for each locality.
Congratulations to every NAMB member who expressed support to their representatives to move this important stimulus package forward. Once the President signs this bill into law, NAMB members will be able to deliver even more affordable financing options to homeowners throughout the country.
Also this week, Senators Barbara Feinstein (D-CA) and Mel Martinez (R-FL) introduced a bill calling for a registry of all mortgage originators and enhanced professional standards. NAMB supports this bill and the powerful consumer protection it will provide by tracking all mortgage originators who work at banks, credit unions, brokerages, and other lenders.
These are just two of the initiatives that the NAMB Government Affairs and national grassroots efforts have undertaken on behalf of mortgage brokers. The timing of NAMB's advocacy efforts during its annual Legislative Conference couldn't have been better! Armed with policy papers and talking points, NAMB's powerful grassroots leaders made their voices heard and made a positive difference for your industry.
Visit http://www.namb.org/ for the latest news affecting our industry.
This will definitely help many people as FHA is typically at 2.75% down payment, wherein Conventional is often at 5% down payment. FHA is also a bit more lenient on credit 'usually' than conventional. However, it must be noted that the main reason (and I know this to be a fact regardless of who wants to debate it with me) that home values have been falling is because it has become ever more difficult to obtain a 'stated income' loan. A Stated Income loan is where you put on a mortgage application that you make (oh, let's say) $10,000 a month, and thus are qualified to buy a $500,000 home. Well, Stateds are very difficult now, so guess what, 95% of Americans don't qualify for a $500,000 home and they can't lie and go stated. So in areas like California where there are still thousands of homes listed for sale around the $500,000 range, those homes are sitting and getting dusty on the market. NAR itself came out yesterday and said "home prices will continue to fall in 2008". This is because home prices must come down to a level where people can actually qualify to purchase them. Will FHA help to spark tens of thousands of sales in the country? Yes!! Will it help to move those $500,000 homes in California, New York, Florida? Not really, because even though you can buy now with less than 3% down, you still have to qualify, and FHA is a FULL DOCUMENTATION OF INCOME loan. So unless you make over $125,000 a year, you can forget about getting that $500,000 house.
All I can say about the Economic Stimulus Plan is that it is not good that everybody is not going to be getting any money. The people who need it more ( People who made less than $3000 ) are not even going to receive a check in the mail come June and I think that sucks. Great post.
I hope their stimulus package does help. Hopefully the higher limits will allow more people back into the market!
Congrats on the feature! I am either a prophet, or the son of a prophet. LOL
Just like me... I'm sure some of you subscribe to Barry Habbib. Barry sent a warning out @5pm ET Friday that said the increases for Fannie and Freddie were only 125% of HUD median. This is clearly not what the Senate Finance Committee Website states, Not what Barney Frank's website states - nor what NAMB said. Can't figure out where Barry is getting his info??
Eleanor - I'm already seeing signs of a turnaround here. Folks are beginning to realize what a fantastic time it is to buy. I think it's only going to get better.
Eleanor: That is exactly what I said in my original comment. I got my info from the gods at my mortgage company (they own about 15 officees, all of them in areas of Calif where the limit will go much higher)
We are under strict orders to have all potential clients already run through DO and ready to lock. They feel there will be a rush.
You can imagine what relief this will bring the San Francisco area, where starter houses cost $700 if you are lucky.
Great cartoon!
We are seeing some improvements in our area. Historic time!