Monday, June 6, 2011

Buyers Beware! $729,500 max loan limit going away this summer!

This information is from Stefani Hartsell with Princeton Capital. She does a great job staying on top of all the news we need to help our clients. If you are thinking of buying in this price range, now would be a good time. Need help - contact us.

I’ve had a few requests to review the changing max temporary high balance conforming loan limit…

Right now the max conforming loan amount in the Bay Area is $729,750. Current legislation has this expiring on 9/30 and it will roll back to $625,500. But what does that date mean?

It is important to understand how the legislation is written. The 9/30 date is the last day that Fannie Mae or Freddie Mac can buy loans up to $729,750. Fannie Mae and Freddie Mac do not lend directly to the public. Lenders do and then they package their loans and sell them to Fannie Mae or Freddie Mac. Currently more than 9 out of 10 of all new mortgages are sold to Fannie Mae or Freddie Mac.

So, Lenders will need to cut-off their lending earlier than 9/30 so that they can package up their loans and get Fannie Mae or Freddie Mac to purchase them prior to the cut-off date. If the loan is not accepted by 9/30, then the Lender gets to keep it for 30 years.

That’s a lot of risk. Last time the temp high balance limit ended, Lenders started cutting off the higher limit 4-6 weeks ahead of the cut-off date. Also, as fewer and fewer lenders were willing to fund those loans, the rates became less and less attractive due to the loss of competition.

No one has made any announcements yet, but the prudent buyer would close well ahead of those dates.

Stefani Hartsell
Senior Loan Consultant
NMLS #281600
(650) 207‐5005 cell

No comments:

Post a Comment