Below is one banks email to mortgage lenders on the Economic Stimulus plan. What is important to note is that this is going to take time to implement. FHA, Fannie Mae, and Freddie Mac have to write guidelines for these new rules. Next the banks have to determine the impact these changes will have on them, and their exposure. Then they will implement the changes.
What I am guessing is:
1) Yes banks will raise the loan limits but the rates may be higher for those loan limits because of the exposure and whether investors will want to buy the loans. Consumers may not see the actual "hits" but they will see the little higher rate.
2) It will be interesting to see how Freddie, Fannie, and FHA determine each areas median home prices. That may ultimately determine whether this will help home refinancing.
3) Changes to the FHA modernization WAS NOT included in this bill.
3) Will your area be in the High cost area? Detroit Real estate may or may not be.
Bottom line is there is a lot to work out once the Economic Stimulus plan is signed. It has a lot of hands to go through. Freddie, Fannie, and FHA will put their spin on it. Then the banks will implement those changes so long as they are not exposing themselves and they are making a profit. Then the consumer may get relief if they are in the right area.
I think it will solve some problems but it is not a cure-all. There are still going to be a lot of sniffles, coughs, and pain through out the housing market.
Read this banks email:
One Bank's Action On The President Bush's Economic Stimulus Package
As you are likely aware, the House and Senate recently passed the Economic Stimulus Package, which includes increases to standard GSE (Fannie Mae and Freddie Mac) loan limits and Federal Housing Authority (FHA) loan
limits. It is likely that the bill will be signed into law by the President as early as tomorrow, Feb. 13. We would like to let you know what to expect from our bank once the bill is officially signed into law. We will follow
up with additional messaging as we learn more from the GSEs and FHA about timing and availability. Several steps must occur before our Bank can accept applications with the higher loan amounts in the bill, including:
* First, the GSEs and FHA must assess their internal impacts to determine the delivery approach they will require of mortgage lenders and investors.
* Second, GSEs and FHA must communicate their requirements to mortgage lenders and investors.
* Third, our bank will work to identify impacts and implement the changes as quickly as possible.
Due to these necessary steps, the higher loan limits offered by the GSEs and FHA as a result of this bill will not be immediately available to our clients (higher loan limits are available through our non-conforming product
offerings).
High-level Details of the Stimulus Package Details of the GSE/FHA requirements are not finalized; however,
outlined below is some information regarding what is expected as a result of the new law: Overall
* The increases are a temporary solution for some high-cost areas based on Metropolitan Statistical Areas (MSAs).
* The higher loan limits will not be immediately available.
* Changes related to FHA Modernization were not included in the Economic Stimulus Package.
GSE Loan Limits
* Loan limits may be as high as $729,750; however, $729,750 will not be the nationwide loan limit. Increases will be available in high-cost areas based on the median area sales prices and will follow the standard HUD
mortgage limit calculation process.
* To determine high-cost areas, the calculation factor will increase to 125% of the area median sales price.
* The increase applies to loans originated from July 1, 2007, through Dec. 31, 2008.
FHA
* Loan limits in high-cost areas may increase to as much as $729,750.
* To determine high-cost areas, the calculation factor will increase to 125% of the area median sales price.
* The increase applies to loans with a credit approval issued prior to Dec. 31, 2008.
For more on Michigan mortgages, metro Detroit real estate go to http://www.russravary.com/
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