Joe Prevost, founder of Pioneer Mortgage, sends the following good news:"Although mortgage rates are at a historic low, raising the limits for conforming loans is really needed to help slow or stop the increasing numbers of foreclosures mounting.
"In our area, the limit is $417,000. Anything over that is considered a "Jumbo" loan. Homeowners in jumbos carrying large loan amounts tended to take on volatile loan products such as negative amortization and short-term, low-rate ARMs.
The major problems then arose when those ARMs began adjusting, causing the payment to go up while values were declining. The scarcity of stated income or reduced documentation loans at high loan-to-value ratios further exacerbated the overall problem.
"The good news: the limits will increase now that H,R. 5140 has been signed (by The President Wednesday). The Puget Sound area is expected to see the limit raised nearer to $500,000. HUD has 30 days to publish their official limits for each metropolitan area, so we won’t have the specifics for a month.
"This proposed increase would allow more people to refinance into a conforming loan.
"Conforming loans are loans that pass muster with Fannie Mae and Freddie Mac. They are a benefit to the borrower because rates are lower and funding is typically easier.
"The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, have operated since 1968 as government-sponsored enterprises (GSEs). This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the Federal Government. This government protection includes access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight.
"If you are thinking of refinancing, we have a limited window of opportunity under H.R. 5140. If you do not already have a relationship with a lender or mortgage broker and would like to discuss your options, please feel free to contact me."
Thanks, Joe. Good information.
1 comment:
This is great news for those of us that were "cornered" into taking a second mortgage out 4 years ago - I for one had a loan request for $450K and the bank would not go the extra 28K – calling it a “Jumbo Loan.” We ended up having to take out the second loan for 100K (as once again the banks would not give a rate lower than 15% on anything less than 85K.) I feel swindled.
But anyway, this will certainly make it right if we can capitalize on the lower interest rates.
Wonder why people are skeptical? This is why..
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