Mortgage Lending Update: Congress Extends Maximum Mortgage Loan Limits Of $729,750 In High-Cost Areas Until Sept. 30, 2011

30 09 2010

Congress has approved legislation extending for one year the existing loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration, allowing the loan guarantee and insurance programs to continue backing loans of up to $729,750 in markets with the highest cost of living.

“Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” the Mortgage Bankers Association said in welcoming the move.

“The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage.”

In addition to extending the loan limits through Sept. 30, 2011, HR 3081 expands the FHA’s capacity to back multifamily loans, ensuring continued funding for development, renovation and mortgage refinancing to preserve affordable rental housing, the MBA said.

Congress instituted temporary increases in the $417,000 conforming loan limit in high-cost areas in 2008, allowing Fannie Mae and Freddie Mac to to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.

A sunset provision in that bill briefly brought the limit back down to 115 percent of median home price, with a cap of $625,500, on Jan. 1 2009.

For more: HUD “Neighbor Next Door Sales Programs” Allow Qualified Homebuyers To Purchase HUD Properties At Up To 50% Discounts

28 09 2010

Neighbor Next Door Sales Programs

Potential homebuyers may be able to get a deal on an FHA home loan with a sales program that offers drastic discounts, which are reported to be around 50% off of list prices on homes, to those who are eligible. With numerous FHA foreclosures taking place across the nation, this discount program is hoped to promote housing in areas where foreclosures have been high by offering these discounted homes to individuals like law enforcement officers, teachers, firefighters, and emergency medical technicians.

Homeowners who qualify for this program can, again, receive an incentive from discounts on homes of up to 50% off the list price if they agree to live at the property for 36 months. This data, according to the Department of Housing and Urban Development, is hoped to build up areas where household income and home ownership is low or FHA-insured mortgages are being foreclosed upon at high numbers.

While this program does potentially offer very affordable housing opportunities for specific individuals, there are reports that indicate that not many are taking advantage of this FHA program. Housing seems to be lackluster at the present time despite the fact that low home prices and affordable mortgage interest rates have been made available over the past months, but also, offers like 50% discounts on home prices have also been met with a tepid response.

Homeowners who may look to take advantage of this program are being advised to consult the HUD website and it needs to be understood that certain commitments come with these discounted homes. Again, homeowners may receive 50% off of the list price on a home but if they do not live in that home for 36 months, there could be penalties or fees associated with this type of mortgage.

For more:

Skip Schenker’s “Hot…Dog Of The Week”: Moreno Valley HUD-Owned Foreclosure Is Being Purchased With An FHA 203k Renovation Loan Utilizing The “Good Neighbor Next Door” Program (Video)

27 09 2010

HUD owned foreclosure purchased using the Good Neighbor Next Door program and the FHA 203(k) renovation loan by first time home buyers Mike & Christina. Mortgage Loan Update: FHA And Conventional Maximum Loan Limit Of $729,750 In High-Cost Counties Set To Move Lower At End Of Year Without Extention From Congress

25 09 2010

Two years ago to help resuscitate the housing market, Congress allowed the Federal Housing Administration, Fannie Mae and Freddie Mac to back loans as high as $729,750 in some locales; well above the standard $417,000 limit. Without an extension on these new limits, as today’s WSJ story notes, that $729,750 ceiling would probably fall to $625,500 next year.

The National Association of Realtors says that nearly one in five U.S. counties—including almost the entire state of California—would see FHA loan limits fall if the current extension expires.

But there’s another issue at play here: loan limits in even more counties could fall because of temporary extensions that have allowed the FHA to guarantee larger loans. There’s a national floor for FHA loan limits, which is currently set at $271,050—this is different from the $417,000 floor used for Fannie and Freddie. That isn’t likely to change. There’s also a national ceiling, currently set at $729,750.

Most counties fall somewhere between the floor and the ceiling. That’s because FHA loan limits vary by region and are pegged to local median home prices. Under normal law, those limits are set at 115% of the local median price; under the expanded limits that are currently in effect, the limits are set at 125% of the local median price.

The current limits are also higher because they’re set using housing bubble-era median prices, which are significantly higher than today’s prices that would be used to recalculate the new loan limits. This means if Congress doesn’t again extend the higher limits, they’ll be starting from a much lower level next year, and the multiplier effect—115% versus 125%—will be lower, too.

The Obama administration supports extending the loan limits for another year for these reasons. “We’re not talking about wealthy millionaires. We’re talking about the average American’s ability … to finance a home,” said David Stevens, the FHA’s commissioner, at a Senate hearing on Thursday.

The limits don’t expire until the end of the year, but the real-estate industry is anxious for Congress to pass an extension soon because banks aren’t going to wait until Dec. 31. It takes a few weeks to close a loan, so banks are likely to stop accepting deliveries of high-cost loans in November if it’s unclear where the maximum loan limits will be come 2011. Mortgage Market Update: Mortgage Rates End Week Slightly Lower On Increased Odds Fed Will Begin Treasury Note Purchases

24 09 2010

The chance for additional Treasury purchases by the Fed helped mortgage rates improve early this week. Stronger than expected economic growth data trimmed the gains later in the week. The net result was that mortgage rates ended the week a little lower.

As expected, the Fed made no change in the fed funds rate at Tuesday’s meeting. Its statement was very similar to the last one, but investors focused on one important difference. Fed officials stated that they are “prepared to provide additional accommodation if needed to support the economic recovery.” Investors interpreted this to mean that additional bond purchases by the Fed could take place in coming months. While the Fed is expected to purchase Treasury securities rather than mortgage-backed securities (MBS), increased demand for Treasuries would be favorable mortgage rates. As usual, investors immediately priced in this information, and mortgage rates improved. Of course, if this action by the Fed never becomes necessary, then mortgage rates could give back this week’s gains.

The housing data released during the week generally matched expectations. While there are differences in regional performance, overall the housing market is holding steady above the lows reached during the recent financial crisis or improving modestly. August Existing Home Sales rose 8% from July. Inventories of unsold existing homes declined 1% to an 11.6-month supply. August New Home Sales were unchanged from July. August Housing Starts rose 11%, and Building Permits, a leading indicator, rose 2%. The September NAHB home builder confidence index was unchanged from August. REO Update: Fannie Mae HomePath To Offer Up to 3.5% Buyer Incentive And $1,500 Selling Agent Bonus On HomePath Properties

24 09 2010
Fannie Mae is offering buyers up to 3.5% in closing cost assistance and a $1,500 selling agent bonus on HomePath® properties. To be eligible for this incentive:
  • Initial offers must be accepted on or after September 23, 2010;
  • Property sales must close on or before December 31, 2010, and close within 60 days of offer acceptance;
  • Buyers must be owner-occupants and confirm that the property will be used as their primary residence by completing a certification form (investors are excluded); and
  • Selling agents must represent owner-occupant buyers purchasing a HomePath property to receive the $1,500 bonus and offers must be submitted on or after the effective date.
The incentive reinforces Fannie Mae’s commitment to stabilizing communities and assisting buyers. For more information about the incentive, visit, read the press release, or contact a Fannie Mae listing broker. Bathroom Renovations: Kohler “Sustainable Design” Toilets, Fixtures And Showers Are Examples Of “Green Improvements” (Video)

23 09 2010

A suburban New Jersey couple prepares to remodel their water-guzzling master bathroom into a stylish water-saving retreat.

Watch this New Jersey couple’s sustainable remodel take shape, as their marble-clad master bathroom becomes a chic and modern oasis.