What happened to new jumbo loan limit?

O

OCMan_IHB

New member
<p>I checked eloan.com and other mortgage sites that were mentioned in this forum to see if the new jumbo loan limit was in effect. I don't think it is. With the interest rate actually going up yet the prices of the descent houses are not falling too much in Irvine, this isn't necessarily a fun time for the ones who saved and waited for a good time to buy a home and stay there for awhile. Is the new some 700k jumbo loan limit still a myth or did credit crunch pretty much nullify it?</p>

<p>On a related point, I heard a radio shock jock giving his listeners advise that this is the best time to buy (well he is a self made millionaire and did mentioned that from not until the end of this year) because the price is dropping and jumbo limit is now well over 700k that the interest rate is very favorable. I guess if you made a lot of money in someway somehow, that makes him/her an expert in a lot of things...</p>
 
<p><em>this isn't necessarily a fun time for the ones who saved and waited for a good time to buy</em> </p>

<p>Maybe it's not yet a good time to buy? </p>
 
My understanding is that (for the big banks at least) it takes time to: (1) run the new loan limits through legal, (2) create the loan package, (3) do change control on mainframe, (4) train staff on new product, and (5) release to market. Considering those loans are only through 2008, I suspect people will have 4-5 months max to utilize them.
 
Yes, I am full doc. What I can afford with 20% down is a loan for about 600k using that 28% DTI ratio and 1% drop on 30 yr fix is significant. However, doesn't mean I'll buy now...
 
Before the banks can offer the jumbo lite loans, Fannie and Freddie have to issue jumbo lite guidelines. They've indicated this will take months. Keep in mind the CEOs of Fannie and Freddie were unenthusiastic about jumbo lite loans so don't expect them to hurry the process along.
 
<p>If you can document your income for a loan that size, you'll be in the top 5% of wage earners in the county. Congrats.</p>
 
awgee,



May be I wasn't clear on previous post but what you wrote is exactly what I thought. I couldn't understand how freddie or fannie can buy these jumbo loans when they were posting losses and no one to buy them out except the government printing more dollars which will inflate the economy and so on...



no vase,



Are you sure I'm top 5%? 600k loan is about $3700 a month with a good rate (6.25%) that's about 150k yr income (combined with my spouse's). Not sure whether that's good enough to be top 5%... Just curious...
 
OCman - An AGI of 232K put us in the top 3% in the US according to turbotax, so you may be borderline. The range to be in the 3rd percent went up to 660K AGI, so we were the poor part of the 3%.
 
<p>SCHB,</p>

<p>I mistyped. I was refering to nationwide (country not county). I have no idea what the local numbers look like, but I can tell you that $200K in W2 household earnings puts you into rare air.</p>

<p>But to give you a solid answer - I guessed. You can find the per capita income here:</p>

<p><a href="http://www.bea.gov/bea/regional/reis/scb.cfm">http://www.bea.gov/bea/regional/reis/scb.cfm</a></p>

<p>and make a rough guess on where the distribution lies. If the per capita median is $45K, a few will be a zero (three confidence intervals on the left), and a few will be over $90K (three confidence intervals on the right). Anyway, to me, there's not much difference between 190K and 240K on the distribution but there's a huge jump from $50K to 90K, if you catch my drift.</p>

<p>At one point I found a chart on where the intervals were, but I'm unable to produce it so I'm resigned to taking some liberties with the data I do have. I do think that the leverage that has been availible for the past 5 years has smeared preceptions of what people really make.</p>

<p> </p>
 
<i>"I couldn't understand how freddie or fannie can buy these jumbo loans when they were posting losses and no one to buy them out except the government printing more dollars which will inflate the economy and so on..."</i><p>

Have you ever noticed how reluctant the Federal Reserve is to take less than stellar collateral? It will be fascinating to see if they start taking more Fannie and Freddie MBS, or whether they turn their backs on it.
 
Souce: Discussion board at Loan Tool Box (a mortgage industry subscription site)



UPDATES ON THE ECONOMIC STIMULUS PACKAGE AS OF FRIDAY, FEBRUARY 29, 2008



FACTS



Belinda Austin of San Diego CAMB, attended a panel discussion put on by the California Assoc. of Mortgage Brokers on the Economic Stimulus Package (ESP) on Friday, February 29, 2008. John Sayre, Vice President of Residential Lending for Fannie Mae and Nancy West from The US Department of Housing and Urban Development (HUD) were in attendance as panel members.



Mr. Sayre confirmed that the new loans will be called Conforming Jumbo (yes it's an oxymoron and he's aware of that).



He confirmed the following for the new Conforming Jumbo loans:



? They will be traded in a separate investment pool from normal conforming loans of $417K and under.



? There will be a marginal price hit for Conforming Jumbo loans BUT he assured us that the hit will not negate the entire point of the stimulus package as it will be more competitive than current jumbo pricing.



? Loans must be funded and closed by December 31st, no exceptions at this point unless Congress extends deadline.



? Conforming Jumbo loans will have more strict underwriting guidelines than normal conforming loans.



? IMPORTANT: Fannie Mae is due to release the letter to the lenders stating the new terms no later than FRIDAY, March 7th (please keep in mind that per the bill provision they have until March 14th but he specifically said next week! )



? IMPORTANT: The lender letter will available on Fannie Mae?s website for the public at large to viewhttp://www.fanniemae.com/index.jhtml



? IMPORTANT: Fannie and Freddie will not start buying the new Conforming Jumbo loans on the secondary market for 60 days (from Friday, February 29, 2008) ? I asked the all important question of when these loans could be originated. He stated that lenders are free to offer these products immediately upon issuance of the Fannie Mae lender letter.
 
<em>Conforming Jumbo loans will have more strict underwriting guidelines than normal conforming loans.</em>





And how will the "benefit" of upping the conforming limit not be negated, since people won't be suddenly able to "afford" ridiculous loans again?
 
<p>Well, at least it's "Conforming Jumbo" and not "Super Duper Conforming" :) ....</p>

<p>Tanta doesn't like "Super Duper" much...</p>

<p>http://calculatedrisk.blogspot.com/2008/02/super-duper-senior-bonds.html</p>
 
<p><a href="http://www.housingwire.com/2008/03/04/apply-now-who-needs-details/">Apply Now! Who Needs Details?</a></p>



<p>Let’s just say it: the origination side of the mortgage banking business is starving. Same for many originators that are “riding it out” in terms of the current industry downturn. </p>

<p>So it shouldn’t be much of a surprise, really, to see that some originators aren’t waiting to tout access to new higher loan limits as part of the the <a href="http://www.housingwire.com/2008/02/13/conforming-limits-boosted-president-bush-signs-hr-5140/">recently-passed economic stimulus bill</a>. In fact, we received a press release from <a href="http://www.refinance.com/" target="_blank">Refinance.com</a> today touting that the company <strong>is already accepting applications for so-called “jumbo conforming” loans</strong>.</p>

<p>Yes, really.</p>

<p>Color us amused. After all, nobody’s exactly sure which areas will be “high-cost” and which ones won’t be; the U.S. Department of Housing and Urban Development has yet to publish a price index that will be used for just this purpose. (Rumors have it that the prices will be published this week.)</p>

<p>For another, nobody’s exactly sure what sort of guidelines Fannie and Freddie are going slap onto these newly-conforming — and higher risk — loans. Nor is anyone sure yet exactly how these things will price.</p>

<p>Not that any of the above has ever stopped a loan officer from taking a loan app in the past. But something tells us there is about to be a mad rush by many originators to try to lock up a pipeline of loans around the new lending limits.</p>
 
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