Fools Rush In (Or Not At All)
There are just a few months left before the ominous roll-back of conforming loan limits and a number of proposals are on the table that will affect us Southern Californians in a big way. Come year’s end, the temporary increase will revert to pre-incentive levels (although slightly higher than they were) and jumbo loans will once again be a reality for most buyers, subjecting them to tighter qualifications and higher interest rates. Slated for adoption are the following measures:
More Restrictive Lending: Roll back of temporary increase in the conforming loan limit and reinstatement of loan caps, jumbo loan qualifications and higher interest rates. More oversight of the lending community and stricter penalties for questionable practices.
Better Infrastructure: Grants to municipalities for the revitalization of neighborhoods with large numbers of foreclosures and disproportionate economic distress or blight.
Fewer Foreclosures: Counseling and financial assistance to relieve homeowners who are in default and at risk of losing their homes.
More Inventory: Help for developers in the form of loss protection and tax relief.
Lower Default Rate: Refinancing assistance to community development commissions and other housing agencies to provide aid to homeowners with sub-prime loans and unaffordable mortgage payments.
All of these things are positive measures in my mind and they hint of a turn-around in the residential real estate market. Granted, these kinds of initiatives take a very long time to implement, so don’t assume a major reversal is on the horizon quite yet. Nevertheless, it is coming and there will be changes both significant and measurable. I do believe it’s time for those who want to buy to start getting serious about their prospects and timing. The window of opportunity is in front of us though it’s anyone’s guess as to when it will shut for good.
Recent Orange County Sweet Digs Posts:
Tips for Homebuyers: Buyer’s Remorse?
Saving the World One Apostrophe at a Time
Bill said:
The “conforming jumbo” products now rolling out among lenders aren’t really benefiting anyone right now. Rates are significantly higher than regular conforming loans, guidelines are still very strict. Being a loan consultant, i don’t see much difference before and after the so-called introduction of these loans. And to the notion that these loans will be rolled back come Dec 31st, i believe congress will do the smart thing and extend this deadline, to allow at some point these new products to gain a foothold in the market, bringing more confident investors into the market to purchase these loans, benifitting new borrowers. It hasn’t happened yet, though.
April 11, 2008 11:02 AM
Carol said:
A couple of thoughts. One, I agree changes like this are slow to grow legs. Given that, why such a short window knowing the benefit will be minimal? Two, (and I ask this out of sheer ignorance, not being combative) why do you think the limits will be extended? My gut tells me they won’t but as a loan consultant you may know something I don’t and I’m interested in knowing what that is.
Thanks for your insights. They are greatly valued!
April 11, 2008 3:39 PM