Schwarzenegger joins push to raise conforming loan limit

Governor: Half of Californians can't get GSE-backed loans
Wednesday, January 23, 2008By Matt CarterInman News
Breaking with the Bush administration's position, California Gov. Arnold Schwarzenegger has added his voice to the chorus clamoring for an increase in the $417,000 conforming loan limit, the ceiling for mortgages eligible for purchase or guarantee by Fannie Mae and Freddie Mac.
In a letter to congressional leaders, Schwarzenegger urged the passage of legislation raising the conforming loan limit to $625,000 in high-cost housing markets, allowing the government-chartered mortgage finance companies to play a greater role in California by expanding into what's now considered the jumbo loan market.
The secondary market for so-called jumbo loans that exceed the conforming loan limit was disrupted last August, by fears of rising mortgage defaults and falling home prices. Those fears -- which began with rising defaults on subprime loans made to borrowers with blemished credit but spread to alt-A and even some prime loans -- have made jumbo loans harder to obtain since last summer, and more expensive for those who still qualify.
Conforming loans -- those eligible for purchase or guarantee by government-chartered Fannie and Freddie -- have remained widely available, and at rates that are falling. That's prompted industry groups such as the National Association of Realtors to call for an increase in the conforming loan limit, so that Fannie and Freddie can provide liquidity for jumbo loans (see Inman News story).
Although the Bush administration has expressed reservations about taking such a step, California's Republican governor is breaking with the party line.
"In a state where the average price of a home far exceeds that loan limit, Californians find themselves priced out of the very help these loans are intended to provide," Schwarzenegger said in a letter to House and Senate leaders.
Last month, the California Association of Realtors reported that the median existing-home price in the state had fallen 11.9 percent in one year, to $488,640. At the end of November, median home prices remained far above the conforming loan limit in markets like the San Francisco Bay Area ($793,930), Santa Clara ($855,000) and Orange County ($661,580).
Leslie Appleton-Young, chief economist for CAR, said decreases in the statewide median prices seen in recent months were the result of difficulties in obtaining jumbo loans.
In his letter, Schwarzenegger claimed more than 50 percent of California home buyers lack access to loans that have the backing of the government-sponsored enterprises, or GSEs.
"When combined with the withdrawal of the jumbo loan market, it's no surprise that current home sales activity in California is half the pace seen in 2006," he said.
A recent analysis by the Office of Federal Housing Enterprise Oversight (OFHEO), which supervises the GSEs, concluded that while raising the conforming loan limit might lower interest rates on jumbo loans, it could also detract from Fannie and Freddie's core mission of providing financing for affordable housing.
Allowing Fannie and Freddie to venture into the jumbo loan market would entail greater risk and would consume funds the GSEs could use to buy up a greater number of smaller loans, OFHEO warned. OFHEO has proposed lowering the conforming loan limit in 2009 in concert with falling home prices.
But Schwarzenegger maintains that moderate- and low-income families in high-cost housing markets are "hit hardest" by the conforming loan limit, because it restricts their access to lower-cost, lower-down-payment, fixed-rate loans.
"Lifting the GSE loan limit in these areas would help put affordable home purchase and refinancing options within their reach," the governor said, noting that Federal Housing Administration and Department of Veterans Affairs loan guarantee programs also have limits tied to the conforming loan limit.
Some who oppose an increase to the conforming loan limit argue that much of the home-price appreciation seen in some markets during the boom was artificial. Speculators pushed home prices out of reach of average families, and prices should be allowed to return to more affordable levels, critics say.
The Bush administration maintains that before it will go along with an increase in the conforming loan limit, Congress must pass legislation overhauling oversight of Fannie and Freddie, which were rocked by management and accounting scandals that forced them to restate several years of earnings.
The House of Representatives passed legislation in May, HR 1427, that would create an independent agency with powers similar to those of a bank regulator to oversee Fannie and Freddie.
HR 1427 would authorize the GSEs to guarantee and securitize loans of up to $625,000 in high-cost housing markets, but not purchase such loans to hold in their portfolios.
A companion bill to HR 1427 has yet to be introduced in the Senate, and attempts to reform oversight of the GSEs have floundered in Congress for several years because of disagreements over limits on growth in their loan portfolios, which today total nearly $1.5 trillion.
New York Democrat Sen. Charles Schumer introduced a bill in September, S 2036, that does not address oversight of Fannie and Freddie, but would provide a temporary, one-year increase in the conforming loan limit.
The National Association of Home Builders (NAHB) and Housing Policy Council (HPC) of The Financial Services Roundtable last week said the groups support a temporary increase in the conforming loan limit in high-cost areas, "as part of prompt action on GSE reform legislation."
The groups called on the Senate to approve legislation similar to HR 1427, reforming oversight of Fannie and Freddie and mandating a two-year increase in the conforming loan limits. As envisioned by NAHB, the increase would be rescinded after two years if the jumbo market returns to normal.
Although Schwarzenegger's letter to congressional leaders did not address such details, a spokeswoman for the governor said he advocates a permanent increase in the conforming loan limit independent of HR 1427 or other GSE reform legislation.

Tax Rebates

You could get your tax rebate by MayCongress and the White House forged a deal Thursday to begin rushing tax rebates of $600 to $1,200 to most tax filers by spring, hoping they will spend the money just as quickly and jolt the ailing economy to life.http://www.msnbc.msn.com/id/22782454/from/ET/

Fed Action Will Drop Mortgage Rates

I normally reach my clients via my weekly newsletter. However, there’s great news about interest rates that’s of great importance to you.
Due to extenuating circumstances concerning the volatility in the stock market and the overall poor condition of the economy, the Fed decided it couldn’t wait until its next scheduled meeting and chose to drop the Federal Funds Rate today by 75 basis points. As a result, conforming loan rates, which are already below 6%, will likely fall further in the coming days.
Many consumers have been sitting on the sidelines through the mortgage market meltdown, but now is a great time to jump back into the market and get a 30-year fixed mortgage at rates we haven’t seen since 2003 (think the low-5s). Whether you or your clients are considering purchasing a new home or refinancing an existing home, today’s great rates will add up to thousands of dollars in interest savings

Gross

National news announced this morning that Orange County California, which happens to be where I live, plans to recycle toilet and other wastewater into drinking water. Their 3-stage filtration process takes 3 days from toilet to tap. This will be our TAP water. And lest you think that you are safe drinking bottled water instead, we have many, many articles showing that tap water is better regulated than bottled water. AND for us here in Orange County, we have a Pepsi plant which either manufactures Aquifina or Dansi I forget which one. So at that plant will be using Orange County reclaimed toilet water to run through their bottling processes.

HealingWaterMachines.com will soon have a duel filter machine that also comes with an external per-filter that is designed just for you from your county water report and we will be carrying whole house filtration systems. So you may want to look into them if you can't handle the gross factor of washing your hands, body or cooking your spaghetti in former sewage water.

Debt Forgiveness

One of the protections that President Bush has put into place during this loan crisis is that from 2007-2010, 1099's will not be issued on debt forgiveness. In the past, if a seller sold a home through the short sale process and the lender took a loss, the lender reported the loss as income to the seller who then had to pay tax on it. So for now people are getting grace and not having to pay taxess on money they never had in the first place.
by Nedalee Thomas-Ruiz, REALTOR'Phone (877) LIST-TNT Toll free, that's (877) 547-8868 Fax (949) 600-7960
Serving South Orange County, Ca.
Ask me how you can buy real estate NOW at 50 -85 cents on the dollar
!http://www.dynamiteresults.com/ MailTo:Nedalee@kw.com

More on Countrywide

From long-time Countrywide insider Kevin Buddy on BofA's purchase of Countrywide.
"The deal is not supposed to close until the 3rd quarter of 2008. Integration begins 2009. We are being told BofA prefers our platform/model for mortgages and has asked our President, Dave Sambol, to stay on and run the whole mortgage division. They say our technology, product mix and execution is superior to theirs. After the close the combination of both companies will have 25% of the mortgage market share in the country. The next closest is Wells Fargo at 11%. For now it's business as usual. There are no immediate changes"

Wrote Two more Offers

I wrote two more offers today. So don't try for La Puente or Bakersfield.

Discount Properties

I can't believe I forgot to post this when I got it last Thursday!
I have these properties at 65 cents on the dollar. That's 35% below current market value!
7985 Tommy Drive San Diego<---offer in on this one
42?05 Marbella st Lancaster The / mark space looks like it could be a 2
18841 Galleano St. La Puente <--I wrote an offer on this one
1362 Teelin Ave. Vista
26013 Arroy Lane Loma Linda
21884 or 21834 not sure Belshire Ave #9 Hawaiian Gardens
1546 Glenwood Springs Ave. Chula Visa<--Offer in on this one.
1154-1156 North Wilton Place Los Angles <---Occupied
3629 Amur Maple Dr. Bakersfield <--Wrote an offer on this one
12025 Doland Avenue Downy <---Occupied
24?17 Coronet Court Lancaster the question mark space looks like it is a 4
589 N. Johnson Ave #242 El Cajon
I also have one each in Vacaville, homeland, California city, Modesto, Sacramento, San Leandro, South Gate, Lake Side, Shandon, Grass valley, Bakersfield, Wildomar (offer in on this one), Sacramento, Modesto, Livermore, Santa Rosa, Fresno, and Vista. Contact me at 949 233-5239 if anyone would like more information. These are light to no rehab properties.

Great Time to Buy

Investors know that it is a great time to buy. I wrote 3 offers yesterday. All for 65%-70% of market value. Those investors will turn around and immediately sell the properties as soon as they close. They expect to make about $30,000 profit on each home in about 90 days.

Also, in the news, Countrywide is being bought out by Bank of America which nixes the suggestion by the news the day before that Countrywide was going bankrupt.

By Nedalee Thomas
www.DynamiteResults.com
Copyright 2008

NO CHANGE FOR CONFORMING LOAN LIMITS IN '08

The Office of Federal Housing Enterprise Oversight (OFHEO) announced Tuesday it will keep conforming loan limits at current levels of $417,000 for single-family mortgages in 2008, and also hinted it could lower the limits in 2009 if home prices continue to decline.The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California."At more than $568,000, the median price of a home in California is more than 2.5 times the U.S. median of $221,000, yet California is not recognized by OFHEO as a high-cost state," said C.A.R. President William E. Brown. "California still has the third highest home price in the nation, compared with Hawaii at seventh, and Alaska, which ranks 39th in terms of median home price. Yet Alaska, Hawaii, Guam, and the U.S. Virgin Islands are recognized by OFHEO as high-cost areas.""Now is the time for the U.S. Senate to pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac loan limits and to modernize FHA loan programs," Brown said. "This critical legislation is a key step to allowing families in California an opportunity to climb the first rung of the homeownership ladder."


Calif. median home price - October 07: $497,110(Source: C.A.R.)

Calif. highest median home price by C.A.R. region October 07: Santa Barbara So. Coast $1,325,000(Source: C.A.R.)

Calif. lowest median home price by C.A.R. region October 07: High Desert $265,880(Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 percent (Source: C.A.R.)

Mortgage rates - week ending 11/21: 30-yr. fixed: 6.20%; Fees/points: 0.5% 15-yr. fixed: 5.83%; Fees/points: 0.5% 1-yr. adjustable: 5.42%; Fees/points: 0.6% (Source: Freddie Mac)

C.A.R. TO HOLD FIRST HOME BUYER FAIR FOR CONSUMERS

C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair Saturday, March 1, and Sunday, March 2 at the Los Angeles Convention Center in downtown Los Angeles.The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership."As California's leading authority on the residential real estate industry, C.A.R. is well-positioned to take a front-and-center role in educating consumers about the facts surrounding today's housing market and provide them with hands-on, practical tools to help them achieve their dream of becoming homeowners," said C.A.R. President William E. Brown. "C.A.R. also is very pleased to have the Los Angeles Times on board as our co-sponsor and we look forward to working with them to produce this exciting event."For more information, visit www.homebuyersfair.com