Comments on: Stimulus Package, New Loan Limits and a Controversial California Law

By: Bill Lyons

Bill Lyons — Sat, 26 Jan 2008 00:19:37 +0000

I am hearing that there will NOT be a jumbo kind of blend pricing for the NEW conforming rates. It will be ALL risk based. FHMA will not increase the NEW conforming rates just because of the loan amount increases. If brother A has all the same factors as brother B except brother A has a $400K ln amt and brother B has a $600K ln amt pricing will be the same.

I am also hearing the EAIIIs are defaulting at a rate of 28% nationwide.
Wells just got rid of their levels…will FNMA get rid of the levels all together?

FHA/VA/DU and remkt to your JUMBO database!

By: Sven

Sven — Fri, 25 Jan 2008 23:27:53 +0000

Couple questions I have: What’s this about the conforming going up only for 1 year? I’d be worried about buying a house for $6-700k with minimal down and a DU approval with a 64.9 DTI if I knew that next year (when I might want to sell same house) when any prospective buyers would need a jumbo loan again (bigger down payment, lower DTI, etc… Will the buyers of FNMA & FHLMC MBS’s figure this out? That their new jumbo Fannie Mae loans may be riskier than the risk they normally expect when buying FNMA MBS’s? $6-700k FHA loans seems farking ridiculous to me, especially since a great many of these could go bad anyway. So we (the US taxpayer, guarantor of FHA loans) would be helping to pay off their current loan (helping out the prior lender) and stepping into their place ourselves! Talk about your “moral hazard”. This would teach banks that the taxpayer will bail them out no matter how dumb the bank acts.

By: Jeremy

Jeremy — Fri, 25 Jan 2008 19:32:50 +0000

I hate to be a negative nelly, and I am usally all roses and sunshine, but there are still a few things that have me thinking this will not lead to a total refi BOOM. Maybe a refi CLAP, SNEEZE, LOUD CLEARING OF THROAT, but nothing as loud as a boom.
Raising the caps on FHA and the GSA’s is great, and will help some people. However, what it won’t do is help that guy with a $525k mortgage, house purchased 6/2006 for $530k, current value: $375k. Raising the limits is great, and I am glad to see a positive step, but I don’t think they raised the LTV limits, did they?
Now the FHA move – I think that may help a few more people, since you can have less than perfect credit and do (at least at this time) 95 ltv cash out. Those that got over extended can get out of it, and for the time being, it won’t be as easy for those folks to go neck deep in debt again. But again, it doesn’t help the guy with a $200k mortgage, $35k in cc debt, and a house valued at $150k.
Again, KUDOS to the government for doing something to help. What is really going to help this market is a PURCHASE or CONSTRUCTION boom, not a refi boom. There are good products and programs out there for people that qualify, but everyone is wating for the market to hit bottom on value before they buy. We need a national effort to spur on HOME OWNERSHIP that will not get us back into the same mess. Here are a couple of ideas that someone much smarter than I can maybe reformulate and take to their congressperson:
1.) FTHB pay a lowered scale of property tax the first three years in the house. Say a 50%-65%-85%-100% method. Borrower’s must dti at full tax rate.
2. FTHB can get an extra deduction on their personal income taxes for the next three years. Using a similar decreasing scale as mentioned above.
3. GOVERNMENT sponsored program to pay closing costs (not down payment – just costs) for FTHB. Does not come out of seller proceeds. Borrower must prove that they have at least 75% of the total dollar amount of closing costs in liquid funds.

Until we get purchases coming back, values will not stabilize, let alone appreciate. We can have the GSA and FHA caps at $2mm, but if everyone is at 150 ltv, it doesn’t help much!

By: Bill Lyons

Bill Lyons — Fri, 25 Jan 2008 17:09:33 +0000

All good for FHA!

Sending out $200-$1200 checks has to be the most idiotic thing though…