From the Wall Street Journal:
Fannie, Freddie Loan Limits Raised
For More Than 70 U.S. Counties
By SARA MURRAY
March 6, 2008 4:04 p.m.
More than 70 counties across the U.S. will see limits for mortgage loans backed by Fannie Mae and Freddie Mac rise to $729,750 — the new maximum limit set by the economic stimulus bill, the Federal Housing Administration announced today.
The counties now eligible for the highest limits are mostly in California, New York, New Jersey, Virginia, Maryland and Washington, D.C. But hundreds of counties across the country had their loan ceilings increased from $417,000, the previous limit.
Allowing mortgage giants Fannie Mae and Freddie Mac to guarantee bigger loans will likely encourage lenders to drop interest rates for loans over $417,000, known as “jumbos.” Before the credit crunch, rates on jumbo loans were about 0.25 percentage point higher than those on smaller loans. Now, with credit tighter, jumbo rates are as much as a percentage point higher.
New limits were also released for FHA-backed loans. The highest limit for those loans is also $729,750, while the minimum ceiling — the maximum loan allowed in lower priced areas — is now $271,050. The agency estimated that the FHA increase could benefit nearly 250,000 families across the country.
Prior to the change, FHA loans were capped at $362,790. The minimum ceiling was $200,160.
“Many families all over the U.S. will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market,” FHA Commissioner and Assistant Secretary for Housing Brian Montgomery said in a press release.
From MarketWatch:
Higher conforming mortgage limits are here
Seventy-one urban areas and 21 rural counties may get some relief from the mortgage credit crunch due to a temporary increase in conforming loan limits announced Thursday by the Office of Federal Housing Enterprise Oversight.
Areas where the single-family loan limit has increased range from Greeley, Colo., where the limit is now $417,500, to Honolulu, where the limit is $793,750, OFHEO announced in a news release.
The new limits were stipulated in the recent economic stimulus package, and expire at the end of the year. Two-, three- and four-unit homes have higher limits too.
…
Mortgages that fall within the loan limits can be purchased by Freddie Mac and Fannie Mae; those that don’t can’t be purchased by the government-sponsored enterprises and are considered jumbo loans. On a 30-year, fixed-rate mortgage today, the jumbo-loan rate can be up to one percentage point higher.
From Bloomberg:
New Federal Housing Loan Limits Could Benefit 250,000, HUD Says
About 250,000 Americans in dozens of states, including Texas, New York and Florida, may benefit from higher limits on new loans backed by the Federal Housing Administration, a Department of Housing and Urban Development spokeswoman said today
Nice coverage of the PHS data by Barry Ritholtz:
Pending Home Sales Down 19.6%
The hallucinogenic spin-meisters over at the National Association of Realtors are once again, misstating what their own data indicates…
First, the Pending Home Sales Index fell 19.6% from year ago levels. This is hardly a “flat” number, as described by their PR release. This is significant, as the NAR itself notes in the footnotes to their The Pending Home Sales Index…
Well, at least they stopped saying “Bottom” — after two years of getting that word wrong…
OT but…do you guys with more experience suggest using a buyer’s agent when shopping for a house? What kinds of questions would you ask realtors to find a good one to represent you?
My idea of a buyer’s agent is someone who will warn me about problems with the property or terms of the deal, drive a hard bargain with the seller’s agent to get the lowest price for me, etc. Am I right to think this? With all of the criticism i’ve heard about realtors, I wonder if they are too much like a club among themselves to be totally on my side.
clot: tell me you had a tight stop on BOOM or I will smack you back to Memphis :(
do the new limits change the qualifying criteria? i’m not sure how this is going to help can someone explain. please
so this doesn’t get lost:
Some actual numbers from your link, pretorius. They’re consistent with your thesis that 2007 was a good year for employment, although query what’s going on _now_ as opposed to last October.
. 2006 2007
ML 43.7K 48.7K
GS 15.4K 17.4K
MS 43.1K 48.3K
BS 13.6K 14.2K
LB 25.9K 28.6K
The numbers for Merrill and Goldman are US employees, for the other, because they do not specify in their public filings, the numbers are international. Also, note that only Merrill’s numbers are for a 12/31 fiscal year end – the others are 11/30.
One thing to remember in this is that 2007 was a HUGE year for all these guys, but that was predicated on a huge first half. The fourth quarter was a disaster, and it would be interesting to have a breakdown of the employment numbers by month. The layoffs that I’m involved in have all been coming in 2008. Employment is a lagging indicator. We won’t really know where the employment numbers are headed at the financial shops until the 2008 10-Ks are filed in the first quarter of 2009. Predictions, anyone?
patient [7],
Why would you have to wait until next year? There is headcount information in 10-Q forms, e.g. BSC’s Aug 07 10-Q shows 15,516.
i read the new limits two ways (non-professional, knee-jerk reaction):
1) HELPS with sale of houses in the 600k and up. The jumbos on those used to be killer, and now that arent.
2) Ultimately does very little because NOBODY HAS SAVED MONEY ANYWAY
3) (unrelated) Buddy of mine is at training this week for new job in VA. In his group is a woman who is about to get her house foreclosed upon. Her and her husband work. They had a 0 down joker, and she was lamenting how the payments are rising and they could lose the house. His quote: “It’s sad.” Then, i enlightened him: “If you took 4k and sunk it into a stock, and missed badly, should you beg and hope the govt helps you out and gives you your $ back? No. This woman and her husband, presumably educated, knew what they were getting into. Why weren’t they more cautious?”
He quickly saw the light.
BLEED THE BLOODY GRUBBERS DRY-
GOODBYE GRANITE
SEE YA STAINLESS
IT’S PAYBACK TIME!!!!!!!
Freddie means
FOUND OUT
HOME
LOAN
MORTGAGEES
CAN’T PAY
#10 I miss Booya Bob
Sigh
Just not the same
8 Punch
Not required disclosure for quarterly filings, so often not present.
9 bloodbath
don’t forget – RAISES RATES generally, because now conforming loans are more risky.
11 bairen
Me too.
Rats.
patient[7],
My argument was made in the 4th quarter, going forward. There was huge hiring in early 2007. The ax didn’t get pulled from the wall until the 4th quarter, when the credit crisis hit. Bear reflects this, from 15,600 in 8/07 to 14,200.
#15 i reckon the fear factor is quite high on any fixed income desk, middle and back office areas.
Tensions rise when the hatchet man is on the loose.
i dont see how the limit increase is going to change anything…
doesnt lower any prices….
if you werent approved before you certainly wont be approved for a higher amount now…
actaully, this may prolong the seller asking these high prices cause they are going to think that for some crazy reason that people are going to be able to afford their overpriced homes now!
#14 npatient
I think I’ll have to channel Booya occasionally with a post like #10.
He was always good for a laugh.
BC
I agree with your argument. I tried to point out that the numbers aren’t inconsistent with that. I just wanted real numbers rather than that bonus article.
actually when i think about it…they should have lowered the limit….this may have helped bring these prices down faster – then raise them if you want to…
ChiFi (5)-
Save your dukes for when you need ’em…I stopped out @ $52 a couple of days ago. That company is fun when they’re on, but they’ve always been a roller coaster.
Bath (9)-
The biggest part of the new limits is that people with crap credit who don’t qualify conventional can now go the FHA route. Low DP’s and fog-a-mirror qualification is still the order of the day there.
Has anyone seen this yet? A 45 cartoon slide on subprime loans? Like a story board for south park.
http://www.slideshare.net/georgenemeth/sub-prime-cartoon/
Funny but loaded with profanity.
A friend of mine doing mtgs in Australia just sent me the link.
Well, shoot, we don’t really care about any IB except Goldman. The rest of them will go down in flames long before.
I dunno where patient’s numbers above are from. Goldman’s August 10-Q says 29,905 employees and the January 10-K says 30,522.
Good times!
23
Posted already but funny every time.
CAIBC (17)-
It will hurt sellers all the more when the horde of buyers they may be expecting fails to materialize.
Sellers who choose to latch onto the newest false hope will only find that they’ve missed the wheels coming off this death bus of a market.
ChiFi-
I learned -the hard way- two years ago never to hold BOOM into earnings. They never hit the number.
Am enjoying my first foray into SDS, though. Good fun.
All disclaimers.
ATTN ALL WHO BOUGHT HOUSES AFTER JULY 2004.
YOU DO NOT OWN A HOUSE… THAT HOUSE OWNS YOU
Economy.com estimates 8.8 million homeowners, or about 10 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households will be “upside down” if prices fall 20 percent from their peak. The latest Standard & Poor’s/Case-Shiller index showed U.S. home prices plunging 8.9 percent in the final quarter of 2007 compared with a year earlier.
I wonder what the divorce rate will be like in 2009?
Financial stress is one of the top triggers for divorce.
4 Anon
I would definitely use a buyer’s agent. As far as asking questions, eh. Not sure on that one. Recommendations are good. I think just going out with them once to see houses and asking your questions as they come up is the best way to get to know them and you’ll get a vibe either way.
I’m not sure any buyers agent is going to warn you about the property, other than what is written on the MLS. That’s what the inspection is for. As far as getting you the price you want, in my opinion, you come up with your best number, submit the offer, see what happens.
I don’t think agents are in a club. I used to call mine, Agent Betty, representing Betty. Sure, they would love to go with a full-price offer because there is a 100% chance that it will get accepted most likely, but they’ll go over with a lower one too. My only advice on making low offers would be to avoid giving your reasoning behind it (needs a new kitchen, bath, etc). It’s a big waste of time, the seller will just argue with you.
And of course, you can switch whenever you want with no obligation, so no worries.
HTH, good luck.
FORT DRUM, N.Y. (AP) — Upset with an increase in the number of its soldiers using illegal drugs and being arrested for alcohol-related offenses, Fort Drum plans to publish the names and photos of alleged offenders in its post newspaper.
It would seem like we lost the war on drugs, if we can’t even contain it on a domestic military base. But then again, Congress has been on drugs for years, so why not.
Why couldn’t they have waited for the crash to happen than reward those who saved with higher lending limits. Now I’ll probably just have to dig in until 2010 or 2011. This is just delaying the inevitable for our area. Unfortunately probably too late for FL, AZ and parts of CA.
Hard (33)-
Don’t worry. They could raise the limits to 2 MIL and drop the rates to 1%. Doesn’t matter…won’t change a thing.
Wil E is headed off the cliff.
Nice West Orange Short-Sale Comp Killer
39 Sheridan
Purchased: 9/7/2005
Purchase Price: $440,000
MLS# 2416353
OLP: $450,000
LP: $399,000
Sold: 3/6/2008
Sale Price: $395,000
10% under 2005 purchase price
# chicagofinance Says:
March 6th, 2008 at 5:44 pm
dream/index: the cadre of investments that you crowed about last spring has clearly been blitzkrieged beyong belief. So, your indexing destroyed value, but worse, your pet actively managed mutual funds have also cratered. Yes…..I remember what you wrote…..
Chifi, do you actually believe I am some f-cking clown of a buy and hold investor who just buys indexes/ETFs and prays it goes up? Do you seriously? Do you think I hang around an RE blog for the past year and a half, yet hold RE and financial stocks through their clobbering and pray for them to come back? I’ve been on the other side of the trade. I am not some obtuse long only investor oblivious to technicals and sentiment. Ha, I don’t even own the S&P 500 Index….never have.
I’ve been long gold and euros since 2003 and 2004, way before this blog existed. I’ve been long India and emerging markets since 2002-03. Do you honestly think the trailing last year’s performance bothers me? I’m up double digit returns trailing 12 months.
I’m down around 2% YTD…..how about stating your returns? Oh wait, you’ll hide behind the veil of ‘because of my line of work and clients’ so I can’t state.
And then launch into one of your eloquent, yet vindictive posts bordering on your narcissistic view of me. Yeah, anyone without a pedigreed education is mediocre, right? Anyone from California or NC or Atlanta is mediocre, right? I can only imagine what contempt you have for other non-pedigreed people.
Is it me or it the ‘C’ stock that has got under your skin? Or perhaps you haven’t grown out of that little bully through school that always liked to pick on someone younger in Kissena Park when no one was watching?
#36 I have a confession to make. I own the S&P 500 – just a little tiny bit. I bought it at the top of the market and it’s been underwater ever since. I keep it around because every time I look at it, it teaches me humility.
stater (37)-
Grab a little SDS and rage against the machine, baby!
Disclaimer: other than shorting XHB on a dare from bi, I have never been long or short an index, SPDR, ETF or basket. I do not like them, do not believe they are good for anything more than a trade and am not in them for anything more than a giggle.
Although if I were long the S&P 500, I’d be downright itching to take the other side of the trade right about now. I see 1270 looming large here…
“Am enjoying my first foray into SDS, though. Good fun.”
Clot,
Double the fun, the markets version of happy hour.
Yesterday on an interesting conference call with Larry Fink and Bill Gross re: the current environment… a few notes for those interested:
Larry Fink
– Believes we’ll see a significant drop in demand for all fixed income products on a long-term basis (interesting comment, considering source)
– Foreigners have been burned buying our debt will not be coming back
– Asia capital markets business seeing big drops; previous growth rates were clearly unsustainable
– Previously had been in the “mark-down” phase; now entering the “liquidation” phase which is ultimately required to purge the excesses. Lots more liquidation to come.
– Seeing huge spreads, indicative of markets stress
– Thinks the notion of economic de-coupling [US vs. Intl] is not valid (vs. Gross’ opinion below)
– Despite all the above, there is huge opportunity with upcoming stresses to buy very good credits at incredible discounts, “time to start taking on risk” e.g. buying up top-tier AAA credits
– Long term bullish on economy, $100 billion in money mkts out of fear- when that begins to come back into equity mkts, powerful driver
Gross
– Risk of all asset classes dropping and causing severe economic problems; tremendous fear in marketplace right now. big risk of global asset deflation
– Global economies ex-US look ok for the moment, but very tbd
– Monolines are failed structures, never truly viable and big warning sign as they strayed outside their core competency into insuring structured products et al; proposed bailouts are weak attempts
and likely ineffective
– Insured ratings are effectively useless, underlying ratings are all that really should have mattered in the past, even more so today
– Asset deflation has to be stopped “at all costs”; expects a significant policy response to stem the drop in housing values given risks (said he didn’t necessarily agree w/ this path, but it would likely happen)
– In addition to above, expected “solution” of more Fed rates cuts
[Ed. comment: sounded like the above was precisely what he wanted, despite his weak talk to the contrary]
– Believed in decoupling of economies would enable intl mkts to do ok vis-a-vis US
– Also seeing very rare/historic opportunity to pick up top quality assets in very distressed markets
p.s. very impressed by Larry Fink’s frankness and assessment of the markets – first time I’d had any exposure, though heard very good things; on a relative basis, surprisingly, Gross’ comments seemed more self-interested, not quite as objective..
Gross’ comments seemed more self-interested, not quite as objective..
Worth repeating.
Clot,
I’ve been in it for a couple weeks now, I actually timed the frigging thing right for once. Always nice when you put a trade on and you hear Gartman say on Fast Money to make it easy just be long gld and short stocks through the SDS.
Every other time I’d get SDS or the SKF we’d get some bs rally over some shit like that Ambac bailout that would send it through my sell stop.
Technician on Fast Money tonight said S&P 500 could be headed as low as 1220. Pretty much echoed what Loise Yamada said the other day on there.
Ps. All disclaimers, I don’t know sh*t, what you do with your money you are doing on your own
BC (39)-
Like the Doublemint commercial with the twins.
Punch
“I dunno where patient’s numbers above are from. Goldman’s August 10-Q says 29,905 employees and the January 10-K says 30,522.”
The numbers are from the 2006 and 2007 10-K, and reflect only US employees.
I believe your numbers are for all employees, including non-US.
I was watching a video of Marc Faber on Bloomberg earlier today. It’s not on there anymore, I hate when they take things off so quickly, anyway they ask him if he thought a major US bank would fail, his reply was “I hope so, it’s the only way they’ll learn”. God Bless Him
Bairen, you’re a riot.
“I wonder what the divorce rate will be like in 2009?”
Maybe we should have Suzanne research that.
”
Gross’ comments seemed more self-interested, not quite as objective..
Worth repeating.”
Consider it done
RE: Gross and Asset deflation has to be stopped “at all costs”; expects a significant policy response to stem the drop in housing values given risks.
Anyone know what Gross recommends, as a fix to asset deflation?
Personally, I feel that if you know your market well enough, buyers agents provide little value. You can do your own research on line to find out previous selling prices, comps etc and they are certainly not going to provide you with reasons about problems with the property, they will only advise you to get it inspected etc. This is partic true in this market.
In fact I think they hinder you getting the best price in this market as they 1) REALLY want the higher price so they get the higher split commission as they aren’t selling to many homes 2) If you don’t use a buyers agent, then the selling agent doesn’t split the commission, thus you are more likely to be able to pressure the selling agent to convince the seller to lower the price, as they now get full commission and they are not going to have to split the commission with the buyers agent and company. If you play this right, along with making multiple offers on houses at the same time you can play them off each other- being careful to stay within the attorney review period so you don’t get stuck in contracts and can get out for any reason.
The other reason I don’t like buyers agents is the ones I have used were horrible negotiators. I would provide a strategy on how to present the offer, in stages, revealing certain information first etc, and they would almost inevitably screw this up spilling the beans in one shot. If you are comfortable negotiating and are good at it, don’t use a middle man/woman.
I have been looking at density of Lis Pendens on a fee based site and am skeptical. Some seem rather old, but if the data is to be believed the amount of property on the way to forclosure is staggering. Many towns here appear to have dozens of these.
The Freakonomics chapter on real estate commissions showed that realtors have every incentive to move the house quickly since the extra 20 or 30 grand a seller might get in a few months after a holdout amounts to weekend poker money for the realtor.
I’m assuming that most sales make use of a buying and a selling realtor, so you would think they would work hard to get a sale through so they can both move on to the next client.
54#
True, but the egos of many realtors gets in the way of a proper negotiation, hence it gets stuffed up.
53#
True, but the egos of many realtors gets in the way of a proper negotiation, hence it gets stuffed up.
not that i neeed to say that twice-sorry……
Kiwi (51)-
Stick to your day job.
Kiwi (51)-
Why can’t you find a good agent?
Would it be too shattering to have your self-fulfilling prophecy of the incompetence of others not come true?
sean (50)-
Rampant inflation as a cure?
dream/index: please allow me to ask a few questions
“I am not some obtuse long only investor oblivious to technicals and sentiment. Ha, I don’t even own the S&P 500 Index….never have.” Why would you misrepresent yourself? Worse yet, why would you carry the charade further and play devil’s advocate?
“Oh wait, you’ll hide behind the veil of ‘because of my line of work and clients’ so I can’t state.” Such a statement is consistent with the chronic contempt you have shown for my work. I have a hard time believing that you do not bring a bias to this discussion that you refuse to acknowledge. You seem to judge me based on your own colleagues and organization’s ethical values and business practices? You don’t even know me, my approach to my job, and how I treat my business interactions.
“And then launch into one of your eloquent, yet vindictive posts bordering on your narcissistic view of me. Yeah, anyone without a pedigreed education is mediocre, right? Anyone from California or NC or Atlanta is mediocre, right? I can only imagine what contempt you have for other non-pedigreed people.” You accuse me of something and then follow that statement with an exact illusion of said behavior. Read your self-critique.
Seriously, you have treated me very poorly and attacked my integrity from the beginning. You are an arrogant jerk and a hypocrit. Think about that point every time you get your paycheck.
OK clotpoll I take it from your jabs that you think buyers agents are a great idea. Go for it
sean, 50
Anyone know what Gross recommends, as a fix to asset deflation?
ZIRP, and helicopter drops of cash? A p.o.s. cape with $500,000 of Fed Bux stashed in the basement is worth at least $500,000 right?
I don’t think helicopters are going to be satisfactory. We need to rebrand the Fed as the Strategic Inflation Command. Let Benny plan some Arclight missions to drop cash. Get him a cigar to use as a prop like Curtis LeMay used to do.
I dont think the proposed limits will do a whole lot for the market in NJ.
I did calculations using MSN mortgage calculators
for a 550000 house with 110000 downpayment
payment with 6% interest is 2,638
payment with 7% interest is 2,927
for a 650000 house with 130000 downpayment
payment with 6% interest is 3,118
payment with 7% interest is 3,460
for a 750000 house with 150000 downpayment
payment with 6% interest is 3,597
payment with 7% interest is 3,992
As wee the maximum difference is something like $300 to $400 provided borrowers are able to keep up the downpayment and have supported income.
I think that if somebody thought that the current prices are justified for the houses
and can afford to make the payments , they would have done so regardless of these new limits and the interest rate decrease for jumbo loans.
I feel that this is another half-baked attemp to support existing prices, even though it looks like it saves people with good credit some money to both re-finance and buy homes.
The correct solution in any inflated asset issue , is to let the market sort it out.
Prospective buyers will jump in when they feel that the valuations are right
The higher limits will do nothing to change the market itself. The game is over now that the fallacy of permanently rising home prices is exposed.
What the higher limits will do is allow financial institution(s) to-be-name-later to unload (previously ineligible) toxic waste from their balance sheets to the GSEs.
wow this topic is good !! please call me i will ask some questions
(90)987 222 433 21