Okay, the stimulus package has been approved. The President signed the Stimulus Package about a week ago. Part of this bill included HR 5140, which talks about the new FHA loan limits.
The FHA loan limits are suppose to hit a ceiling of $729,750, but when will this go into effect? There were some rumors that it would not be until around mid-March that this would go into effect. There are some rumors which state that this bill won't go into effect until late July. And two other unconfirmed reports state that it will be permanent and another stating that it will only last until the end of December of 2008.
Now, I know that they said the new Fannie Mae and Freddie Mac limits were going to expire at the end of 2008, but now the FHA limits? What's worse is that you can't really find the correct information. HUD doesn't even have any posted as of yet, what the real deal is.
Overall, what I don't understand is that Bill HR 5140 has been in Congress for almost 2 years now. It finally gets signed, but nothing has been put on paper for the investors to start originating these FHA loans with the new limits. You would have though that when they finally agreed on the new ceiling limit of $729,750, that this would have been ready. I know it can take some time within the government. But are we in a stalling period? The FHA reform in my opinion has been a huge disappointment. And we can't forget, that there will be risk base pricing attached to this new bill. There will be different MIP percentages depending on your credit scores and LTV's.
I had to write about this because I have been getting numerous e-mails and phone calls asking when this was going to take place. I know as much as the President, nothing. In all seriousness, who does know? What can read into memos handed out? By HUD? By the media? So many seem to have answer to this. But until I see the actual investors with the new limits, that's when I know it will be safe to say that we can now help you.
For any other mortgage needs, especially anything to do with FHA mortgages, please never hesitate to contact me.
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Copyright © 2008 by Jeff Belonger
Jeff,
Looks like we're both thinking the same thing today. I'm especially curious to see what kind of underwriting guidelines are implemented and whether they will carry some "adverse" fee that we've grown accustomed to seeing in the past months.
Jeff,
Zach again - we're thinking the same thing because I just posted this a couple minutes before you:
http://activerain.com/blogsview/385846/-Say-Hello-to
JASON..... wake me up when the commercial is over... which might be in 1 to 3 months. I have lost all excitement about this a year ago for several reasons. Especially since this started in 2006. And even more so, because I don't see this helping as much as many do. A lot of news reports from financial experts now stating that between the new loan limits, the other taxe issues, and the tax refunds, that it won't help as thought. I agree..... again, the government just trying to curb fear in the market place. Look at rates... the stock market is doing well, and bonds are getting hit hard, which rates are rising...
ZACH... I think this has been on the minds of so many, especially now, since they announced the signing of President Bush. But did he and HUD... Congress and a few others go on vacation? And I read your post, thanks.
MICHAEL.... this is a semi boring topic for many, but yes, it's been confusing. Why can't we just get one factual report... lol
Jeff - Yet another example of the unnavigable and endless maze of bureaucracy put in place so that the hard-working, well-intentioned small mortgage company is left twisting in the wind. Anyhow, according to a letter from the Mortgage Bankers Association titled "Stimulus Package Increases in FHA and GSE Loan Limits" received by a colleague yesterday, "HUD will publish the prices and limits in the next two weeks and will hold a call with the industry." I am frustrated as well, and only time will tell when all of this will become official.
Jeff,
Did I hear you say you were running for president??? :^) Thanks, Fran
Does this surprise you? Not me. Congress is all about making themselves look good, not helping the consumer.
Ditto Cynthia... since when does it matter any more than what gets featured in the press? The real functionality of any promise is buried beneath the spin material.
You are too smart to run... don't let 'the title man' give you any big ideas!
as I have been saying all along, "I will believe it when I see it!"
The Secretary of HUD, and OMB, have 30 days from the signing the bill to provide suggested guidelines for loan types, units, etc. to OFHEO. After that, OFHEO will make recommendations to FNMA & FHLMC, who in turn will make recommendations to large investors (Citi, Wells, Countrywide, Chase, etc.) regarding the types of loans, fixed or adjustable, number of units, etc. No one is sure of the exact schedule.
Did you say December 30th?
AJ
STEVEN.... say that in English.... lol Well, they can post it in 30 days from when the bill was passed... okay, they have to in 30 days. But that still doesn't mean when it would go into effect and when lenders will be jumping all over this. I am sure that they will need time to tweak their systems also, when in place.
FRAN..... nah, nobody would elect me because I would be upfront, honest, and tell people what we would need to do to correct the problems.. and not fluff to get elected...
CYNTHIA.... we are in an election period. This will happen, but will it help? I have stated my opinion in this comment 02/20/2008 12:53 AM to this blog Your credit market update
JENNIFER..... ah, the spin material. Don't so many of us put a spin on things? ;o) And yes, I am too smart to run, yet also too poor to run.... lol Would you like to be my campaign manager? lol
LARRY...... time and legs crossed with a beer in hand... read my comment to Cynthia above and the links that I provided. That's how I feel about the loan limits and Bill A. semi agrees with me.
ALAN..... I believe it..... but it's the investors that can add hits if they want. Those dictating pricing, such as fannie, freddie... and investors when it comes to the Ginnie pool.
JAY..... yes, they will buy, but there will be a price attached, in my opinion, as I mentioned in my response to Cynthia with the links...
from an email I just received from our corporate:
- FHA loan limit increases are temporary and will be elimiated on Dec. 31, 2008
- Loan limits will be increased the lesser of (a) 125% of the area median home price or (b) $729,750
- The increased loan limits will be available only in "high cost areas" - These "high cost areas" will be defined by HUD within the next thirty days. Early indications are that only a few metropolitan statistical areas(msa) will be impacted - the majority of which will be located in Califorina, Southern Florida, Washingto DC, and New York City.
For all the press around this, doesn't seem like it is going to be an advantage to 99.9% of us.
-thor
How many people could qualify FHA, full doc on a mortgage (PITI+MI) of $5200 per month??? For a front end ratio of 35% they would have to make $17K per month. Hmmmmm, let me check my database, I've got about "zero" people that fit that category, I'm sure Belonger has about half of his folks that would qualify though! (Right Jeff???)
I think the fact that more than 50% of all the jumbo loans out there were reduced doc is still going to be the biggest problem!