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dibs!
I think Rota Municipality got ripped off, they only capped at $473,750.
In any case, it is complicated, and micropolitan, so that means it's largely contained.
With agency spreads blowing out like the Patriots playing my Bills, there are gonna be a lot of disappointed potential buyers/refi-ers. When they see that they still have to pay 6.5% + for a 30 year and put 5% down, they may just say "nevermind."
Still, I would expect some kind of bump in the MBA refinance index next week or the following.
first step: raising conforming limits
second step: relaxing lending guidelines.
doesn't matter. Investors no longer want to purchase mortgage loans. You can raise the conforming loan limit to 1,000,000 and prices are still going to drop 90% over the next 5 or so years.
The guidelines are posted on efanniemae.com Someone on the "utterly unhinged" thread last night posted a link to them.
Primary residence capped at 90%LTV, with FRM and new appraisal. Plus you'll have their declining market hit of 5%LTV.
Sorry, I don't know how to do the linky thingies but efanniemae has them under single family products.
Welcome back!
I agree with YTL. The next phase is to lower qualification standards. The GSEs will be the next subprime lenders. All that will be required is to sign a paper stating you promise to pay them back and if you don't, you lose the house.
Where I live, the limit has been raised to $729k and change. Woo Hoo. In a few months I can take out a 110% LTV (With a 10% inflated appraisal) neg am GSE loan. Make the minimum payment until my cap hits and then walk away and buy a new home with the cash. It will be a lot easier than selling and I'll net more money. Thank you uncle sam.
The difference in yields, or spread, on the Bloomberg index for Fannie Mae's current-coupon, 30-year fixed-rate mortgage bonds and 10-year government notes widened about 21 basis points, to 237 basis points, the highest since 1986 and 103 basis points higher than on Jan. 15. The spread helps determine the interest rate homeowners pay on new prime mortgages of $417,000 or less.
It sounds like insted of jumbos heading to conforming rates, conforming rates are rising to jumbo rates.
doesn't matter. Investors no longer want to purchase mortgage loans.
This is very true. It isn't just loan limits. Fannie and Freddie have Required Net Yields (RNY) that any loans they buy have to fulfill.
And check out what those have done over the past week:
DATE TIME 10-DAY 30-DAY 60-DAY
03/03/2008 08:15 05.67237 05.70194 05.75250
03/04/2008 08:15 05.77549 05.81140 05.87269
03/05/2008 08:15 05.92859 05.96232 06.01564
03/06/2008 08:15 06.17960 06.20952 06.25947
03/07/2008 08:15 06.20314 06.23265 06.28360
Up 55 basis points in 5 trading days! And if Fannie and Freddie ain't buyin', the bankers ain't loanin', no matter whether it's for $10 or $10M.
(BTW: Link for Fannie is at https://www.efanniemae.com/sf/refmaterials/hrny/index.jsp if anyone's interested.)
I'm confused. So, all of Texas stays at the old $417K level?
How temporary are we talking? I'm fairly sure sure that our next President will not push to have these limits dropped back down in their first 100 days, so we are looking at 2 years minimum. And once things start to look better, who wants to be the one to lower the limits and ruin the party?
I'm inclined to believe these limits are permanently temporary. But what do I know? I didn't go to Wharton or Columbia, I'm just a Rutgers guy scraping out a living in Jersey.