Category — Loans & Mortgages

CONGRESS IS DEBATING the maximum conforming loan amount on conventional mortgages. The current maximum is $417,000. Democrats support increasing the amount to $730, 000. Republicans want $625,000.

This legislation will probably pass. The $730,000 amount would help the Bay Area by far the most. If so it will be a boom to the real estate market in the Bay Area. Currently jumbo loans over $417,000 don’t have a secondary mortgage security market. This problem came home to roost with the mortgage securities market crisis. Bay Area lenders were having a difficult time selling jumbo mortgage securities.

Bay Area mortgages are generally over $417,000 and increasing the conforming loan amount would reduce the interest rate on most loans being originated in the Bay Area, and particularly Santa Clara County.

Maybe the do nothing Congress will do something… like compromise?

A related article in Business Week: A Jumbo Problem In California, here.

PRESIDENT BUSH asked Congress in his State of the Union address to Congress to pass legislation authorizing States to issue tax free bonds to help homeowners facing foreclosure obtain cheap mortgages. The President didn’t provide specific details. There is no link as I just finished watching the State of the Union.

I noticed Charlie Rangle, Chairman of the Appropriating Committee, setting stone faced in the audience. Rangle did not applaud the Presidential request, nor did the Speaker, Nancy Polosi.

The President is not acting like a Lame Duck. However, to the Democratic Congress he is definitely a Gone Duck. Don’t hold your breath. State backed below market interest mortgages are unlikely to arrive soon. Come to think of it… State bonds are tax free anyway, the States have always had authority to issue bonds to make below market rate mortgages…. Ahh….

INTENTIONAL FORECLOSURES are becoming a trend.

CBS is reporting homeowners noticing homes far superior to their own selling for less than their own homes.  Their answer?  Buy the cheaper better home, with a lower mortgage payment, and ditch the existing home by allowing it go to foreclosure.

With California’s no deficiency laws (CCP 580) this can be done with almost no consequence to the homeowner.  Defaulting on a mortgage in California is less consequential than defaulting on credit card debt.

Novel, and interesting.  Are these buyers lawyers?

THERE IS A MORTGAGE REFINANCE boom underway as rates drop. But many homeowners will not qualify, because of falling home prices, credit scores, or income.

I TOLD YOU SO, and you heard it first on the Real Estate Block, most metro areas are showing a decrease in the number of listings.  Although January normally shows a drop in the number of listings, current statistics at Altos Research show more than an average decrease in listings.

Most metro areas have more than 90 days of listing inventory consequently prices may continue to fall, but at a slower rate.  The total listings to monthly sales ratio is an important indicator of price trends.  When the ratio is 1:3, or 90 days, the market will be “flat”, neither a buyers nor sellers market.