FHA loan limits could drop yet again on January 1, 2012
While Congress debates how to create jobs, a vote on retaining the current high cost limits on mortgages has not yet taken place. Thus we revert to the ‘old’ way of calculating the loan limits as of loans not fully credit approved and clear to close by September 30th. Currently, the new loan limits in place on Oct 1st, in the Minneapolis/St. Paul Metro area will revert to $318550. However, the formula for calculating the limits in place on January 1st, 2012 may result in even lower limits. The loan limits in place after Oct 1 2011 expire December 31 2011. This could dramatically affect purchase agreements written that are set to close after the 1st of the year.
In a recent conversation with our HUD liaison, the median house prices in our highest cost county have dropped significantly since the current limits were established and we may see a further decrease in loan limits if Congress does not act soon. I definitely wouldn’t count on that happening. According to a Reuters article issued today, “The Acting FHA Commissioner, Carol Galante, has recommended to the House Financial Services subcommittee that Washington should allow the ceiling on mortgages that it will back to return to pre-crisis levels.”
Ackerman to Introduce “Homestead: Act 2″ to Reduce the Housing Glut and Put Americans Back to Work and Spur the Economy. Let’s see where this one goes…
U.S. Rep. Gary Ackerman (D-NY) announced that he will introduce “Homestead: Act 2,” a 21st Century Homestead Act to reduce the housing glut AND put Americans back to work.
First, in order to decrease the glut of three million of the existing unsold, vacant, often-blighted and foreclosed properties that are currently impeding economic recovery across the country, the Act would offer the first two million creditworthy borrowers down-payment assistance in the form of a matching subsidy up to $20,000 for a down payment to eligible single-family homebuyers. This down-payment subsidy would be a loan to the owner-occupier, one-fifth to be forgiven in each of the first five years of owner-occupancy.
Second, the Act would provide a 10-year tax exemption on rental income for the first one million individual homebuyers who purchase existing single-family homes as rental properties.
VA Funding Fees will drop soon unless…
Per current United States Code (Title 38, Chapter 37, Section 3729) and recently passed Public Law 112-026, VA Funding Fees are set to decrease for VA transactions funded after September 30, 2011.
As an example, unless Congress passes legislation to keep them at the current levels, the funding fee for a purchase, first time user of VA eligibility, regular military would go from the current 2.15% to 1.4%. For a reservist, using their eligibility for the first time, the fee would go from the current 2.4% to 1.65%.
My 2 Cents
After watching the President’s speech last night, I can’t help but wonder if the President or the members of both parties of Congress understand just how important it would be to put their focus on the housing market as the source of job creation.
My simple recommendations for creating jobs sound something like this:
1.) Leave the FHA limits alone until further notice. The best healed borrowers have lost so much equity in their current homes, that FHA is currently providing the only means to stimulate the housing market by allowing borrowers to move up or out. After taking every dime out of their savings to keep from having to destroy their credit with a short sale, there is little left for many to effect a move up or out. Lower limits will not cause beleaguered bankers or the private sector to step in and take more risk. Are you kidding Carol?
2.) Allow any borrower with a Fanniemae, Freddiemac, FHA or VA loan, a good job, and great credit to refinance without an appraisal. We all know house prices are upside down. If we did that, all of the people who have been paying their mortgages on time would be able to lower their rate, put more money in their pockets, and therefore spend more to stimulate economic growth. These are the people we want to help. Why are we spending billions to clean up foreclosures and short sales when we could prevent so many more of them with this step? The taxpayers are going to pay one way or the other so why not take this positive step?
3.) Put a moratorium on new Dodd/Frank or CFPB regulation implementation until we can all catch our breath and figure out how to do loans again based on risk quality instead of I dotting and T crossing. The cost of implementation for all of the new regulation of the last several years has been astronomical and after all, which honest, credit worthy borrower has been positively impacted by the 17 new forms they are required to sign, especially the one with the FBI emblem that tells them that mortgage fraud is a crime? And, which crook decided not to do it because he had to sign the form?
A penny for your thoughts? Feel free to forward this to as many people as possible so, we the people, can figure out how to get this ball rolling. I, for one, don’t want to wait another 3-4 years. Housing has historically lead the way into and OUT OF most recessions. Housing creates jobs because people buy stuff. Really, is it harder to see than that? I only ever claimed to be a simple mortgage banker. -Kate Wilson
