Federal Assistance

Fannie Mae released the guidelines for conforming mortgages over $417,000 (called jumbo-conforming). The guidelines can be found here.
Highlights:
Full-documentation only
660+ credit score
Single unit homes only (no duplex, triplex, 4-unit)
45% maximum debt-to-income ratio
No cash-out refinancing
75% LTV maximum for refinances (70% for declining markets–most of Southern California)
90% LTV maximum for purchase - fixed rate (85% for declining markets–most [...]

HUD has now published the new conforming loan limits for 2008. You can lookup them up here. As far as I know, neither Fannie nor Freddie have adjusted their underwriting systems to allow the limits yet. Once they do, it will take a while longer for lenders to offer the new limits to customers. It [...]

Here’s a great article from Bloomberg describing how inflation fears are causing rates to rise. It also comments on future Fed action and the steepening of the yield curve.

It was a busy week for economists, policymakers, consumers and mortgage professionals.
We had a surprise .75% rate cut from the Fed.
We had the announcement of an economic stimulus package that included not only significant tax rebates, but a temporary increase in the conforming loan limits from $417,000 to $729,750 (a huge, huge win for Californians).
We [...]

It’s amazing how quickly fear of inflation can be replaced by fear of recession.
In a surprise move, the FOMC lowered the Federal Funds Rate by .75%. That this happened before the FOMC’s regularly scheduled end-of-January meeting, combined with the size of the cut and the willingness to aggressively cut further, indicates how precarious the Fed [...]

Through the constant onslaught of dire news in the mortgage markets, did you notice that the average 30-year fixed-rate, conforming mortgage rate was 6.20% according to Freddie Mac?
Compare this with the average rates each year since 2000:

Period
Rate

November 21, 2007
6.20%

2006
6.41%

2005
5.87%

2004
5.84%

2003
5.83%

2002
6.54%

2001
6.97%

2000
8.05%

Not too bad!
Of course, lending guidelines are now more strict. It’s more difficult and more expensive to [...]

The most popular question asked of the average loan officer is “What’s your rate?” Good question, but it’s like asking a car salesman “How much is a car?”
My clients know that there are considerations more important than rate alone in achieving the optimal financial picture. Still, every loan has a rate, and I always tell [...]

The Core Personal Consumption Expenditures (PCE) Index rose by 1.8% in August versus a year ago. Core PCE measures price changes in consumer goods and services, excluding volatile food and energy components.
This is the third consecutive month that year-over-year Core PCE growth has come in under 2%, significant because the Fed considers 1-2% to be [...]

Jonathan Clements has an excellent article in the Wall Street Journal today about what to do with your personal finances if you are worried about a recession.
One of the key items is setting up a home-equity line of credit (HELOC) as an emergency source of funds, and I am reminded of an article I wrote [...]

Today, I take a break from all the talk of the Federal Reserve and give you an article I wrote in February about taxes and real estate:
April is around the corner, and we all know what that means. It’s tax season again. And that merits a discussion on income taxes and homeownership.
Most of you already [...]