This just in.....

I just wanted to let you all know that Fannie Mae just released the new loan limits today. $729,750 for the Tri-State area and Loan to Values up to 90% for purchases. 75% for rate and term refinances. These loan amounts will be available starting next Monday the 17th until the end of the year.

That's the problem - the poor mortgage lenders' level of psychological terror?

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I think what will help is, first, if the government figures out some way to make people face reality and make home prices go down enough that people can afford them without using absurd percentages of their income to pay for housing.

The fundamental problem in this area and other boom markets is that it seems as if, downtown, you have to earn $100,000 a year to live a frowzy, Bohemian life, and $150,000, or maybe $200,000 once you factor all of the taxes in, to live what most people would think of as a standard middle-income lifestyle.

But I just don't think all that, even downtown, that huge of a percentage of the people make $100,000 per household, let alone $150,000. To some extent, everything the government does to prevent foreclosure is counterproductive, because it keeps people from adjusting home prices to reflect what people can really afford to pay for homes.

Second, I think, from what I read, that the real problem with the mortgage market, and related markets, is that lenders are terrified of being thrown in prison, or sued, or being humiliated simply because they make what seems at the time to be a reasonable business decision.

I think the government has to use guarantees, promises not to prosecute people, etc. to reduce the lenders' level of psychological terror and paralysis.

These measures will definitely add to liquidity in the short term and will be good for cities like JC. The fact that this limit increase may be temporary, will only enhance the likelihood that potential buyers will act within the timeframe, thereby providing some instant relief to the real estate markets.

I agree that the resultant rates will be risk adjusted, but they still will be an improvement over present jumbo rates.

I think this will free up cash for banks. With more cash, banks will be more willing to lend.

If banks know that they are guaranteed a buyer for their loans, they will lend. The straw that broke the camel's back was banks not being able to find buyers for their loans. This guarantees a buyer.

Will we return to being able to buy a house with just a signature and a smile, def. not. But I think that markets like JC have been affected by banks tightening and being able to buy a single family in JC under the new limit is going to be easier (rates more favorable) than it currently is using jumbo and second products.

Will the new limits help everyone..NO...but it seems as if it will def. make a difference in places like NYC metro.

One thing that most people are forgetting is that these new limits will have "pricing adjustments" to the "price" of the loan which will cause the rate to be a touch higher than regular conforming loans.

Also they will not be eligible for cash out refinances, only purchases and rate and term refinances. Problem is that if you have a first a second mortgage that were not taken out together for the purchase of the property, Fannie Mae will look at it as though it is a cash out refinance and it will not be elligible. An example would be purchasing a property in January and taking out a HELOC to fix it up in Feb. If you wanted to combine them into one loan without taking any additional cash it will still be consider a cash out and not elliglbe.

There are stillsome very agressive Jumbo loans for Full Documented borrowers and Stated loan for borrower with high ficos and low Loan To Values.

I have been giving my clients a 30yr fixed up to 1 million at 6.25% with no points and that includes cash out.

The point I'm trying to make is that this new "temporary program" is only going to fix a few of the problems. I'm looking at it as more of a good PR image fix for Fannie and Freddie than a real solution.

The cash out issue if what is really pissing me off.

My 2 cents.

flame away

true it is a risk...but you know with the federal government wanting to make sure that there is no repeat of the current fiasco, i bet they extend....especially when we start seeing pictures of the trump-wannabe families loosing their mini-mansions.

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Big gamble on a "probably".

the new limits would probably be extended.

It wasn't in your linked article, but I recall the plan has a 3 or 4 year sunset provision in it, so the limit will drop back down, possibly leaving people upside down on their properties if new buyers can't buy at such advantageous rates.

I think it will have a significant impact. I have heard many stories about buyers who have decent income, credit score and the like but because of the underwriting standards and rates being charged for jumbos were not able to find financing.

According to the article, when compared to rates on current jumbos the rates on new conforming loans under the limit should be more favorable. These new limits will at least free up cash for the banks, allowing them to write more loans. Places like JC should see significant benefit.


http://money.cnn.com/2008/03/06/real_ ... ges_get_cheaper/index.htm

Thoughts?