FHA, FNMA, and FHLMC Loan Limits In San Diego Returned To $697,500!
February 27th, 2009 Categories: Escondido, Mortgage News
Well, it looks like the “new and improved” stimulus bill will have an immediate effect on mortgages. Fannie Mae (FNMA), Freddie Mac (FHLMC), and the Federal Housing Administration (FHA) have announced that they are reinstating last year’s high balance conforming loan limits.
For 2008, FNMA and FHLMC, as well as FHA, would insure loan amounts up to $697,500 in San Diego. Any loan greater than that number was considered a Jumbo loan. Unfortunately, that loan limit dropped to $546,250 effective for loans closing on or after January 1, 2009. That meant that anyone looking to buy or refinance San Diego real estate could pay an interest rate as much as 2% higher than if borrowing the true conforming loan amount of $417,000.
However, the recently passed H.R. 1, also known as the American Recovery and Reinvestment Act, restores the higher limit of $697,500. In some areas, such as Los Angeles and Orange Counties, the restored loan limit is $729,750 up from $625,500 earlier this year.
These higher loan limits are often referred to as Conforming Plus or High Balance Conforming loans. FHA loans that exceed $417,000 in San Diego County may be referred to as FHA Jumbo loans.
This is great news for those borrowers that are looking to purchase or refinance in today’s low interest rate environment. Conventional buyer’s can now purchase a $775,000 home with only a 10% down payment.
Questions? Please feel free to email me today.
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Government Poised To Make Historic Moves To Strengthen Our Economy
September 20th, 2008 Categories: Brookside Escondido, Foreclosures & Short Sales, Market Trends, Mortgage News, Rancho Bernardo
Huge headlines, scary story lines, and big government moving at breakneck speed to shore up our economic backbone. You are undoubtedly hearing about an eminent and massive move by the Federal government to finally get its arms around the national, indeed global, financial crisis. The latest courtesy of my friend and Branch Manager Paul Gonzalez at our sister company CW Mortgage.
We are writing to you today to briefly shed some light on what this may mean to you and I. It will be historic, with nothing in our Nation’s history to compare to it. And this is going to happen literally in a matter of days. 
The Federal government appears to be preparing a new entity that will purchase most, if not all, bad mortgages that are currently on the books of lenders and banks, and possibly Fannie Mae and Freddie Mac. The Federal Reserve, US Treasury, Securities and Exchange Commission, Congress and the Administration are feverishly working on this as I am writing this, and will continue through the weekend and into this coming week.
When a bank has a lot of bad loans on its books, it must set aside equal amounts of cash to offset the bad debt and protect its stockholders. This is currently tying up tens of billions of dollars that could otherwise be pumped into the financing system. This has also caused, or been a primary factor, in the collapse of institutions including IndyMac Bank and Lehman Brothers, among many others.
The intended effect of the Federal plan will be to free up huge amounts of capital that lenders and banks will again be able to lend as mortgages and other types of consumer financing.
The plan will likely resemble the Resolution Trust Corp, or RTC, which was set up in 1989 to clean up the portfolios of bad debts that resulted from the Savings and Loan crisis of the times. . All this is vitally important to you and I, and all real estate professionals, and will warrant our close attention over the next few days and weeks.
If such a plan is enacted we will expect to see investors and banks more willing to invest money into the mortgage financing system. Increasing the amount of funds in the system should, over time, bring down the interest rate spreads and lower interest rates.
In the short term, be prepared for wild swings in the stock, bond and mortgage markets. Volatility will be likely rule the day until the global markets begin to sense greater stability and lower risks in putting money into the financing system.
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Government Bailouts Increase Buying Power for Homeowners
September 19th, 2008 Categories: Real Estate News
One of the most important functions of our Government is to help individuals and corporations when they are in trouble. Last Sunday, our Government made a strategic decision to officially bail out Fannie Mae and Freddie Mac. The decision is obviously great news for the two mortgage giants, and homebuyer-hopefuls should be just as excited – you’re going to benefit, too!
Although the bailout is a complicated issue, it is better than the alternative – the failure of two companies that own or guarantee about $5 trillion in home loans! A complete failure of Fannie Mae and Freddie Mac could have lead to a catastrophic freeze in the mortgage market because of the lack of money to fund new loans. The bailout is positive news and is exactly what the housing industry needs right now.
The CEO’s of Fannie Mae and Freddie Mac are being replaced and the new heads will report to the recently formed Federal Housing Finance Agency – which was created under our friend the Housing and Economic Recovery Act.
There will be an injection of up to $100 billion into each of the two companies which should help lower mortgage rates and add stability to the economy. Lower rates and added stability will entice banks to become more willing to write new purchase-money loans and refinance existing loans.
Since the announcement, we have already seen a dramatic decrease in rates. From September 5 to September 8, Conforming 30-year fixed rates dropped about a half percent! In my twenty-five years of financial and real estate experience, I cannot remember a time when rates decreased that much in such a short period of time.
Buyers are coming out of the woodwork asking how much more they can afford at these lower rates. With their buying power significantly increased, everyone is excited by the homes that are now in their price range.
San Diego is a particularly fortunate place to be if you want to buy a new home. A recent report by Global Insight, the global leader in economic and financial analysis, showed that San Diego homes are undervalued by more than 17 percent. This is a dramatic drop from 2005; at that time our city was overvalued by more than 39 percent.
The combination of lower rates, increased buying power and a newly affordable inventory of housing makes this a fantastic time to buy a home. The key will be for the rates to hold at these low levels. 
Remember, lower mortgage rates alone will not solve the housing predicament. The highly unregulated, wild west of loan guidelines we experienced a year or so ago helped get us into a mess and the market is still in a corrective period. Reasonable rates, fair guidelines and a properly valued market are our way out.
It is still hard to tell how all of this will be absorbed in the long run and there is no quick fix to the housing situation, but combined with other recently passed legislation, we are making fantastic progress.
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