Plenty of news from last week and I mean even bigger than the Ducks’ smothering of the overmatched Trojans.
In FHA and FNMA home financing news, the High-Balance Conforming Limits that were set to expire this year have been extended through all of 2010. This is big residential real estate news. This legislation means that Central Oregon FHA limits will remain at $417k rather than rolling back to the ~$300k level they were headed for. And for Fannie Mae loans, while the difference in OR between “standard” conforming ($417k) and “high-balance” conforming ($447k) is minimal, the difference in markets that often provide buyers into Central Oregon is very important. California’s high balance limit of $729,750 when combined with a purchase-money second of $350,000 and an approx 20% down payment means that a home with a purchase price of $1,350,000 can be purchased without jumbo financing. FNMA-backed, conforming rates are better than Jumbo residential rates which still don’t enjoy a secondary market.
In economic news, the Q3 GDP numbers were published with a surprisingly high 3.5% growth. This news has to be tempered with a few caveats as cheerleaders call for the official end of the recession. The start of a recession officially waits for 2 consecutive quarters of GDP decline. People often look back to an earlier date to peg the start but it isn’t official until we’ve experienced the 2 consecutive quarters. With this one-quarter upturn, even at the surprising, >1% growth number, we need to remember some of the temporary stimuli that are included in the 3rd quarter, especially the Clunk of a car incentive program (see here for $24,000 per car taxpayer cost analysis.) Local inquiry resulted in one car dealership indicating that they have had ZERO new car sales in the weeks since Clunker ended. So, while we are happy for some upturn in the GDP, let’s watch for more signs of broad improvement before we relax.
In banking news, the FDIC shutdown 9 more banks on Friday and this was before the CIT restructure announcement. This brings to 141 the number of FDIC takeovers since the beginning of “The Great Recession” and 115 on the year. Incidentally, the 9 banks along with CIT are heavily invested in Commercial Real Estate. Many community banks are the repositories of land, development and commercial lending and we are just still seeing the tip of the iceberg on problems there. Once again this past week Signet stepped in to help a building owner who had been turned down on a loan renewal request with their bank (of 30 years!!) unwilling or unable to extend credit in this region. Please have building owners you know step forward early and get refinanced now rather than waiting for the current note to come due. Signet is ready to take care of their refinancing needs now.
In other legislative news, the Home Buyer Tax Credit Extension gathered momentum and some clarity this past week as we reported on Thursday. However, this is not yet a done deal. The progress last week included a voice vote of confidence in the Senate and an assurance of House passage, but the actual vehicle for passage in both houses needs to be finalized. The likely scenario has the Home Buyer Credit being attached to an unemployment extension bill that has similar levels of support. While the benefits of kick starting the economic engine are likely, the results still raise questions (see Clunker discussion above.) Assuming passage here are the high points again:
- $8,000 FTHB credit continues
- New $6,500 for existing homebuyers
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- Same home for consecutive 5-yr period
- Contracts signed by 4/30/10
- Closings before 7/1/10
- Income limits expanded
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- Old: $75,000 single, $150,000 Married
- New: $125,000 single, $250,000 Married
- Military personnel extension into 2011
- New tax return filing requirements
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- Fraud prevention
- HUD-1 attachment to returns
I appreciate all of your support ... lots of changes in the industry and many have not survived - Thanks to you keeping us top of mind - Signet has continued to thrive and celebrated its 6th year in business this summer! As I am 100% referral based - I depend on you to keep growing! We have added exceptional professionals to handle the increase – don’t hesitate to call.
Look for expanded resources on our web site coming soon - an increased emphasis on Commercial Financing, Renovation Lending and Reverse Mortgages.
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