Great News For The Higher Limit Conforming Loans!

There have been some recent positive changes in the
FNMA and FHLMC higher limit conforming loans that
are in effect at least through December 31, 2008.

**The interest rates and fees for the loans between
$417,000 and $697,500 (in San Diego) are now much
closer to the traditional conforming rates and fees.

**There now is an option to refinance and take cashout
to a maximum of $100,000 (based on loan-to-value
guidelines). Initially, they would not allow this or
even allow the payoff of a second loan through a
refinance on this program.

**Loans can now go to 80% of the value of the property
in certain circumstances. At the beginning, 75% was
the maximum.

You may recall that when the Economic Stimulus Bill
first became law, FNMA and FHLMC had the ability to
purchase loans above the standard $417,000 limit for
a single-family property.

The maximum that went into effect was now $729,750,
based on a county's median home price. In San Diego,
the computation created a limit of $697,500.

The initial guidelines were very conservative. Since
FNMA and FHLMC were now taking on the risk of higher
loan amounts that the private sector used to absorb,
there was a reluctance to open the floodgates.

They have had a couple of months now to assess how well
their guidelines were working. I think it was fair to
say that because their guidelines were so restrictive
that they did not receive as many new loans as they
may have been anticipating.

There is no question that this element of the Stimulus
Bill failed to produce much stimulus.

With these new changes, however, many borrowers are now
going to get the opportunity to purchase homes with
significantly lower interest rates and fees.

Many borrowers are going to be able to refinance from
an adjustable rate loan to a fixed rate loan and have
predictable payments going forward.

Many borrowers will be able to refinance their loans
which were fixed for the first 3 or 5 years and not
have to face the resets of those loans to possible
higher interest rates or have them become adjustable
rates.

Many borrowers will now have a chance to improve the
terms of their loans, which started as jumbo loans,
by refinancing them to terms that are very close to the
traditional conforming rates and fees.

Now is the time to put a strategy in place. If you, (or
anyone you know), has a loan below $697,500 in San Diego,
investigate your possibilities. Rates may be attractive
enough right now to want to take action.

If rates are not quite where they need to be right now,
we can agree on a game plan going forward.

Remember, all we can count on right now is that these
temporary conforming limits will be in place through
the end of the year. There are no guarantees (or even
any indications at this time) that this time limit will
be extended.

We are finally getting to see some of the possibilities
promised by the Stimulus Bill. Don't procrastinate and
miss out on any opportunities that this may present.