California Association of Realtors Supports Keys to Recovery!

FANNIE MAE ANNOUNCES THEIR "KEYS TO RECOVERY"
C.A.R. Leadership has long supported increasing Fannie Mae's loan limits in high-cost areas such as California. C.A.R. also supports Fannie's efforts in ensuring that homeowners and home buyers in high-cost areas are afforded an opportunity to have access to safe and affordable financing options. We will continue to work with and support Fannie Mae as it begins implementing the increased loan limits throughout the high-cost areas in California.

Fannie Mae President and CEO Daniel Mudd yesterday announced the company's "Keys to Recovery." Under the new plan, Fannie Mae will begin purchasing mortgage backed securities (MBS) comprised of the new conforming jumbo loans. Because Fannie Mae is required to separate the new conforming jumbo loans from conventional conforming loans (loans below $417,000) into separate MBS, the interest rate spread between the two products has varied between 70 basis points and 120 basis points. It is hoped that this action will bring the new conforming jumbo loan's interest rates at or just above those of conventional loans.

Additionally, Fannie Mae said it plans to refinance Fannie Mae-owned mortgages in certain circumstances even when the borrower is "underwater" on the loan.