Archive for the 'Changing Guidelines' Category
Sacramento mortgage rates shot up to 6.24% this week from 5.5% during the week of January 24th, according to Freddie Mac’s weekly rate survey. Most people are still under the impression that the Fed adjusts mortgage rates or that mortgage rates move in lock step with Fed cuts. In recent weeks, Sacramento mortgage rates have done exactly the opposite. The market is a bit better this morning on news of flat consumer spending and lower consumer sentiment.
Nehemiah Gets The Cold Shoulder
I wrote about combining FHA + Nehemiah: a Path to 103% Financing a few weeks ago. It’s one of only a couple ways left to structure 100% financing. Several title insurance companies and at least one wholesale bank announced this week that they will disassociate themselves from deals where the Nehemiah program is being used. Nehemiah has survived numerous challenges in its non-profit status over the years, and it has another court test approaching. Are these companies are putting some distance between themselves and what will be hind-sighted as yet another contributor to the meltdown?
New Conforming Loan Limits
As the deadline approaches for HUD’s assessment of median prices, hopes fade for any meaningful increase in Sacramento conforming loan limits. According to my sources, Sacramento will be designated as a “high cost” area, but with median prices somewhere in the low $300k range, the formula may yield only a small increase, if any. Higher limits could unlock S.F. Bay Area markets and send more relocations our way to absorb inventory in the upper prices range.
read comments (0)Lenders have finally begun pricing the new Jumbo Conforming Loans. So far, Fannie Mae will only be accepting delivery of the 30 year fixed on April 1, with the 5/1 ARM on May 1. Here is a comparison of the a) normal conforming 30 yr fixed, b) the new jumbo conforming 30 yr fixed, and c) the regular jumbo 30 year fixed, all from the same lender’s rate sheet today at 3pm.
a) 5.5% at 1 point / 5.875% at zero points
b) 6.5% at 1 point / 6.875% at zero points
c) 7.5% at 1 point / 8.000% at zero points
Similarly, here are the d) traditional FHA and e) new Jumbo FHA 30 yr fixed rates:
d) 5.750% at 1 point
e) 6.625% at 1 point
In my last post New FHA & Conforming Loan Limits Announced, frequent Lending Clarity commenter and knowledgeable industry professional Catherine Coy provides a link to Fannie Mae’s guidelines and pricing policies.
A quick read of Fannie’s guidelines revealed some key points about the new conforming loans, or what Fannie calls Jumbo Conforming loans. This list is by no means comprehensive, so you’ll have to read it yourself to get all the details. These are just the ones that seemed particularly noteworthy to me:
Fannie Mae Jumbo Conforming Highlights
- Fannie will start accepting delivery of 15 & 30 yr fixed-rate mortgage on April 1 and 5/1 ARMs on May 1. (Lenders will probably begin originating these immediately)
- All new jumbo conforming loans must be manually underwritten.
- No “Cash Out” refinances allowed
- Fixed rate, 5/1 interest-only, and 5/1 fully amortized loans only
- Minimum Fico 660
- Max purchase LTV/CLTV for fixed is 90% (700 Fico required over 80%)
- Max purchase LTV/CLTV for ARMs is 80%
- Max rate & term refi LTV/CLTV is 75/95%
- Max 2nd home and investment purchase LTV/CLTV is 60%.
Here’s the matrix…
Read the rest of this entry »
In my last post New FHA & Conforming Loan Limits Announced, frequent Lending Clarity commenter and knowledgeable industry professional Catherine Coy provides a link to Fannie Mae’s guidelines and pricing policies.
A quick read of Fannie’s guidelines revealed some key points about the new conforming loans, or what Fannie calls Jumbo Conforming loans. This list is by no means comprehensive, so you’ll have to read it yourself to get all the details. These are just the ones that seemed particularly noteworthy to me:
Fannie Mae Jumbo Conforming Highlights
- Fannie will start accepting delivery of 15 & 30 yr fixed-rate mortgage on April 1 and 5/1 ARMs on May 1. (Lenders will probably begin originating these immediately)
- All new jumbo conforming loans must be manually underwritten.
- No “Cash Out” refinances allowed
- Fixed rate, 5/1 interest-only, and 5/1 fully amortized loans only
- Minimum Fico 660
- Max purchase LTV/CLTV for fixed is 90% (700 Fico required over 80%)
- Max purchase LTV/CLTV for ARMs is 80%
- Max rate & term refi LTV/CLTV is 75/95%
- Max 2nd home and investment purchase LTV/CLTV is 60%.
Here’s the matrix…
Read the rest of this entry »
New FHA & Conforming Loan Limits Announced
The new, temporary FHA and Conforming Loan Limits for 2008 were announced today by the Office of Federal Housing Enterprise Oversight (OFHEO). For the Sacramento Metropolitan Statistical Area (MSA), the new loan limit for single family homes is $580,000, a substantial increase over the current conforming loan limit of $417,000 and the current FHA loan limit of $362,790. You don’t live in Sacramento? Check your area here.
Weird Math
This a nice surprise! I was pretty sure that with a median price in the low $300k range as reported by DataQuick and NAR, the new limit wouldn’t offer Sacramento home owners much relief. But here’s the part that was not apparent in the language of the bill. This is from the OFHEO list:
the maximum temporary loan limit is calculated as 1.25 times the median house price for the highest priced county in the property’s metropolitan or micropolitan area
Ah! That makes a big difference.
The Final Puzzle Piece
So the last piece of the puzzle fits into place when we learn how the lenders will price the “jumbo conforming” loans. FHA says there will be no premium charged for the higher-than-normal FHA loan limits, but Freddie Mac has already declared that the new conforming loans will be segregated into different pools based on the increased risk of early payoffs.
Stayed tuned for that pricing, but let’s get your jumbo loan dialed in and ready to go. Rates are on the upswing, and we may not see rates fall any further.
New FHA & Conforming Loan Limits Announced
The new, temporary FHA and Conforming Loan Limits for 2008 were announced today by the Office of Federal Housing Enterprise Oversight (OFHEO). For the Sacramento Metropolitan Statistical Area (MSA), the new loan limit for single family homes is $580,000, a substantial increase over the current conforming loan limit of $417,000 and the current FHA loan limit of $362,790. You don’t live in Sacramento? Check your area here.
Weird Math
This a nice surprise! I was pretty sure that with a median price in the low $300k range as reported by DataQuick and NAR, the new limit wouldn’t offer Sacramento home owners much relief. But here’s the part that was not apparent in the language of the bill. This is from the OFHEO list:
the maximum temporary loan limit is calculated as 1.25 times the median house price for the highest priced county in the property’s metropolitan or micropolitan area
Ah! That makes a big difference.
The Final Puzzle Piece
So the last piece of the puzzle fits into place when we learn how the lenders will price the “jumbo conforming” loans. FHA says there will be no premium charged for the higher-than-normal FHA loan limits, but Freddie Mac has already declared that the new conforming loans will be segregated into different pools based on the increased risk of early payoffs.
Stayed tuned for that pricing, but let’s get your jumbo loan dialed in and ready to go. Rates are on the upswing, and we may not see rates fall any further.
As if tumbling real estate values, toxic loans, and rising foreclosures weren’t bad news enough, banks have begun freezing Home Equity Lines of Credit (Heloc), depriving homeowners the ability to draw on their remaining home equity when many need it most.
In recent years, the banks promoted Helocs by offering them like a free Happy Meal to consumers when they purchased or refinanced a home. Buying into the idea that a heloc could provide a safety net during difficult times, consumers often accepted.
ARE WE LAZY, OR IS THERE TOO MUCH FINE PRINT?
In its primer entitled What You Should Know About Home Equity Lines of Credit, the Federal Reserve Board notes:
Plans generally permit the lender to freeze or reduce your credit line under certain circumstances. For example, some variable-rate plans may not allow you to draw additional funds during a period in which the interest rate reaches the cap.
But if anyone bothered to read the fine print or noticed the Fed’s warning, few anticipated the perfect credit storm in which we now find ourselves.