Okay #1. This time last year the BIG news that we were all telling our clients was about the Housing and Economic Recovery Act of 2008. One of the things that would help stimulate the economy was the "temporary"increase in loan limits over 417,000 to 729,750 in high cost areas. Wooohoo - now get out there and tell all your buyers in the price range over 417,000 that they can get lower interest rates on JUMBO loans and qualify for more home! HOLD THE PHONE MABEL....it tooks weeks for investors playing the mexican standoff, waiting for each other to price these Not Jumbo, but "Conforming High Cost" loans before we found out that they were now MORE expensive than before. OOOPS! "No one wants to buy them on the secondary market Mr. X, that's why the rate is now .75 - 2% higher than conforming rates. "
So didn't we just change the name from Jumbo to Conforming High Cost? And eventually the price got a little better but not the same as conforming loans, and here we are again.......January 1st the conforming limit is going down from the temporary 729,750 to 625,500 HOWEVER, a week before the end of the year the risk premium add on for loans over 417,000 just went from .50% TO 1.%. Will jumbo, I mean High cost, I mean super conforming, ummm JUMBONOT loans still cost more than 417,000?.....um can anyone say.... jumbo loans?........ SMOKE?
Okay #2 HOPE FOR HOMEOWNERS..... I was so excited to share this new information with my realtor offices the day it was announced to be the FIRST one with the news. Summary, this program created a temporary program within FHA to refinance distressed loans at a significant discount for owners at risk of losing their homes in return for a share of the future appreciation. Oh and did I mention this program is voluntary? No lenders, servicers or investors will be compelled to participate. So NOONE DID! I couldnt find any investor to buy these loans! Well I guess one did, because a wopping 6,000 homeowners were able to utilize this program....But millions more had...can you say... HOPE......................MIRRORS?
Okay #3 LOAN MODS.. Now don't get me wrong, loan mods are a great way to help the people that were put into BAD loans.... Or loans that weren't bad, but BAD for the client by BAD loan officers who bartended at night and did loans by the day (no offense to my friends the bartenders - trust me, I love them! But stick to bartending) and those same people are now making commissions on loan mods? The same vulture capitalists that put these people in those loans they couldn't afford in the first place! Hey Mr X, remember Me? Well since you are about to lose the home I diligently helped you buy (that you couldn't afford) I can now help you keep it (ching ching) Just look at Craig's list - they are all the same people! Again, nothing against Loan Mods and there are plenty of honest people helping clients with loan mods - but then again, there were plenty of honest loan officers helping clients buy homes. Subprime meltdown? Can you say Loan Mod meltdown? It's only a matter of time before the government realizes that they have to regulate this too. Oh and to qualify? You have to be BEHIND on your mortgage... So um Mr. X,I know you spent years saving up 20% to buy the home and have perfect credit but would like to take advantage of a lower 3% rate for a few years, you have to ruin your credit and stop paying your mortgage otherwise you're screwed with the 6.5% rate you have b/c you don't have enough equity to refinance, when you're neighbor who saved nothing and had horrible credit, owes more than the house is worth and is behind on his loan is now getting 4.5% for the next five years........sorry!..................
SMOKE AND MIRRORS!
I'm hopeful that something the government comes up with in 2009 will actually HELP our homeowners, our buyers, our sellers, our businesses and our economy. I believe in the law of attraction and I know for sure, either way- that it will be a great new year, at least for me. I don't blow smoke, and I'm throwing out my mirrors!
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