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what does the GOVERNATOR wants ?

Mortgage and Lending with kandola mortgage services


Here in California Gov. Arnold Schwarzenegger wants Congress to raise the Fannie Mae and Freddie Mac lending

limit from $417,000 to at least $625,000 as part of the economic stimulus package. State Assemblyman Ted

Lieu is pushing for a bill that requires mortgage lenders to tighten up already strict guidelines to make sure

homebuyers can afford their basic monthly bills before qualifying for a mortgage loan. This bill would also ban

certain designer mortgage loans such as the option arm mortgage. The option arm mortgage, also known as the

pay option arm, allows borrowers to pay less than the interest that is due by adding the unpaid interest to the

balance of the mortgage loan. The bill would also allow some homeowners to refinance their homes without

being responsible for any penalties or unnecessary fees.

Comments (1)

raman kandola
kandola mortgage services - San Jose, CA
One of the big differences in bonds backed by the U.S. Government and those backed by first liens is that when rates decline, US Treasury securities don't pay off. Borrowers historically do refinance, and many a loan agent has a book of business based on refinancing. This time around, however, things may be different. Although mortgage rates are approaching the levels in 2002/03, unfortunately refinancings should be significantly lower. First, jumbo loan (and alternative documentation) availability is very limited due to underwriting guidelines, securitization economics, and bank balance sheet constraints. Second, even with FNMA & FHLMC, the soft housing market and increasing guarantee fees should keep refinancings slower than in previous years. The good news is that investors are more interested in owning securities backed by mortgages than they were in the past due to a lower fear of refinancing! Once again, let's hope for an increase in loan limits, and finding borrowers with equity and that can qualify is job #1.
Feb 18, 2008 12:58 PM