Home > Blogs > Joe Adams > Musings and Thoughts from Western Colorado

So what happens when the banks refuse to honor the new FHA limits????

By Joe Adams

Mortgage and Lending with Major Mortgage USA/Branch Manager

March 18, 2008 07:23 AM

Now this is actually happening. First Wells said they will honor the new limits and now 24 hours later they are not honoring them. At least on 1 and 2 unit properties. And this may only be on the wholesale side, but it does create a small problem with loans that are locked with the new limits and ready to close.

Ok it isn't that large of a problem for me with all the other investors I have, but I wonder about the others that don't have the "backing" I have. And what does this say to the public..... Yes Mr. Borrower the limits are raised BUT we at Wells Fargo are not honoring them? and is this national or just local?

I can understand a business decision, but this one makes me wonder. And why are the 3 and 4 unit properties ok but not the 1 and 2?

Comments(8)

Comment

Show All Comments

Sort:

Sherry Connor

Myers Park Mortgage - Charlotte, NC

Wells is holding out... there are other lenders doing the same. I think they are nervous about the quality of paper. Can't blame them. As I said in a blog comment earlier...IF the banks do not loosen up the guidelines a tad to assist the struggling homeowners trying to do the right thing, then the Gov't should be a direct lender! They would atleast show some short term profit and would employ a large group of loan officers, processors, and underwriters that are laid off right now. Plus they would force the banks to compete. Just a thought! and what do I know!

Mar 18, 2008 07:52 AM

-- Casey Brischle

Columbia Bank - Spokane, WA

Spokane Home Loan Mortgage Professional

Haven't ran into that up here in the Inland NW, but our FHA loan amounts are very modest in comparison to larger cities.

Mar 18, 2008 08:32 AM

Joe Adams

Major Mortgage USA/Branch Manager - Montrose, CO

*********** UPDATE *************

it is only wholesale.... the branches are honoring the limits

Mar 18, 2008 08:49 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Joe.... First off.... loans are already closing with the new loan limits? lol They just raised these limits a few weeks ago. I knew some people took applications before the limits came out. I told many that I didn't think that was wise. I have my reasons....

But in regards to your issue. If you have other lenders to go to, why worry about this? I actually knew that we would have some issues, and that it would take many investors more than a few weeks to sort through this. One of our investors said that they would only go up to $417,000. Now, the other issue is that rates are different depending on the loan amount... lol I am laughing because I told many that this was going to happen. It's call risk. And lenders can do what they want. Sure, pricing is still lower than the regular jumbo loans, but it's still higher than the regular rates. Lastly, just more work for the loan officer, because we need to be careful on what we quote.

Overall.... we can complain what these lenders do...changing things... but they are the ones taking the risk, so they can change what they want when they want. Why is Wells only allowing their retail to do these loans? Because they have more control over these loans that they originate.

Mar 18, 2008 11:03 AM

Mr Jeff, as I said no worries..... and Wells is the 800 pound gorilla in our market. If they were not honoring the limits I was about to have a field day marketing against them...... just flipped to another investor and close friday. Life is good

Mar 18, 2008 11:08 AM

Mr? lol Jeff will do Sir Adams... ;o) Seriously, yes, no worries... and yes, it would give you good reason to market against them.

Mar 18, 2008 11:10 AM

Sean Allen

International Financing Solutions - Fort Myers, FL

International Financing Solutions

Yep... Pretty much sucks. Personally I believe that if a lender refused to meet the new guidelines then FHA should cancel them as a lender who is FHA approved.

Mar 20, 2008 02:15 PM

Sarah Eubanks

Hill Valley Financial Services - Oregon City, OR

Preferred Oregon Loan Consultant & Notary Public

In truth...I never have been Wells' biggest fan. Too many times I have had them back out of a commitment. I avoid them these days! :) Interesting points made here though!

Mar 20, 2008 02:39 PM

So what happens when the banks refuse to honor the new FHA limits????

Comments(8)

Joe Adams

Real Estate Resources

Recent Posts

Additional Information