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All of the established lenders stopped originating these loans August 15th. There are still a few shops pulling in loans that are above the $625,500 limit. You have to be a plain vanilla as possible (W-2, not Self Employed, no FHA, no gifts, significant equity if refinancing) and there is no certainty of closing. With the amount of new refinance business out there, the likely chance of closing if your new loan started today is pretty slim.
The loan limit change impacts not only purchases, but the refinance market. I’m getting a call per day from people who funded at 4.875% or higher wanting to refinance to 4.x or lower with some taking ARM programs in the mid 3’s. These homeowners are now stranded, unable to reduce their house expense without a significant principal reduction.
On the one hand come October the confluence of slowing sales, crushed buyer confidence, and restricted loan limits should finally register with sellers. A mad rush to the exits may finally start. On the other hand if the Temporary Limits are restated, another Gubmit induced sales price sugar high will keep prices artificially supported. We’ll soon see who has the stronger lobby: bankers and the NAR, or the debt resistant citizenry. Interesting times we live in, don’t you agree?
My .02c
Soylent Green Is People.
Yes - it will be very interesting indeed if the temporary loan limits get extended “temporarily” again. If I was betting on this, I’d put my money on the banksters/NAr, and if they win come October all of us fence-sitters will need to tack on several more years (maybe another decade?) of waiting/investing outside of SoCal RE. There will be zero doubt who runs this country if it comes to that.
I’d bet against the banksters/NAr on this one. They may have prevailed in Washington a couple years ago but this is just the kind of deal that the Tea Party can’t stand and I doubt the Dems want to waste any polical capital fighting the Tea Party to save banksters. The Dems would only fight it if they could add some sort of “foreclosure” prevention to it which would require banksters to write down principal (see todays NY Times opinion page) and banksters are not going to go along with that.
I don’t get it. Why is it so important to reduce limits?
Is it because this limits exposure to FNM/FRE? Or, is it because we want prices to fall?
If it’s because of the former, I believe there are many arguments that in places like OC, stable jobs are more plentiful than elsewhere, so that argument doesn’t really hold water. People also get paid more here than many other places. Owning in the present rate environment can also be cheaper than renting. Why not just require 20% down for lower rates? Oh, I forgot, we already do that for FHA PMI. Why again?
If it’s because we want prices to fall, that’s somewhat of a self fulfilling prophecy. Without a healthy banking sector, there are few lenders that can make reasonable money without leverage, something that is not necessarily a bad thing (especially when the goal is to promote the economy through lower rates). And, more importantly, that’s sour grapes.
I was a bubble sitter too, but don’t just sit around and complain, find a way to profit from the inevitable.
The writers of this blog did.
Chuck
I think reducing limits was a political expression about the liabilities of the government through Fannie and Freddie.
No one is saying you cannot get a loan. The Feds are saying you cannot get a government subsidized rate through it’s implicit guarantees for any amount over $625,500 or get a mortgage with less than 20% down over that amount.
Don’t like the rate you’re getting on private financing? Don’t have the funds to put 20% down? Too bad. There is no legitimate reason to keep loan limits up at $729,750, and barely one at $625,500. If people earn more in OC, they should be saving more for a house - a prudent direction to head in these uncertain times. You can still leverage the heck out of your home purchase by borrowing against your retirement plan instead of TBTF banks. No one is stopping anyone from purchasing, but there are realistic restrictions being put in place.
Had FNMA and FHLMC reduced the $417,000 loan limit in 2005 and they had wanted to, many of the problems before us wouldn’t have come to pass. It was the Banker / NAR cartel who wanted the limit retained. They sowed the wind and reaped the whirlwind because of it.
How about to reduce the entitlement spending on the rich?
And yes, anyone who can spend $730k (or even $630k) on a house is rich.
Why should the government use the tax money of the rest of us to support the rich’s housing addiction?
That house is so lovely!
I only wish that they had commented that it backs to the “culverdale wilderness park”, surely that would have supported the $234/sf offering price!
We cannot forget the mortgage provision in the Graham Dodd bill that will become active April 1st of 2012.
ALL MORTGAGES GOING FORWARD WILL REQUIRE A MINIMUM 20% DOWN.
When added all up, Declining housing market, lowering of the conforming limit, rising down payment requirements, and bad economy…......
I think we may be looking at Armageddon for the residential real estate market.
did this proposal pass or is it still being debated? maybe in Irvine, the 20% down requirement may not have much inpact; however, it will certainly impact other surrounding areas which will impact irvine indirectly. everywhere, the high end will get hit quite hard. 20% down and lowered jumbo loan requirement? no more FHA, not that it should impact Irvine anway? Looking for more clarification. thanks
Interesting times indeed. On a completely different note, I noticed signs in Harvard Circle Park, that using your cell phone for talking OR texting was not allowed. I didn’t think it was possible to ban cell phones from parks, but dayem, leave it to freedom loving Irvine to do so.
Yet another reason to not buy and live in Irvine. I’ve said it before, and I’ll say it again, America is not the most free country in the world. How could it be, yet support such a strong prison industrial complex?
Interesting times indeed. On a completely different note, I noticed signs in Harvard Circle Park, that using your cell phone for talking OR texting was not allowed. I didn’t think it was possible to ban cell phones from parks, but dayem, leave it to freedom loving Irvine to do so.
Yet another reason to not buy and live in Irvine. I’ve said it before, and I’ll say it again, America is not the most free country in the world. How could it be, yet support such a strong prison industrial complex?
This is Off Topic IHB, but last week I was sued in court by a collection agency that bought 5500 worth of bad credit card debt from a well-known bank, then added over 2K in fees.
Having throughly researched and participated in a foreclosure lawsuit that resulted in my mortgage company halting my foreclosure, I used an IL Pro Bono legal aid website tutorial to fight the debt collection agency.
I felt justified, since I never had an agreement to pay any collection agency, or no specific memory of anything that the collection agency alleged in their complaint.
I was able to have my lawsuit terminated by demanding that they produce evidence of the original contract that led to the purchase of my alleged debt, assignor and assignee documents, amount of purchase consideration, and dates of all of my alleged purchases.
The IL Collections Agency Act, Uniform Commercial Code and IL Civil Code of Procedure are powerful tools that helped my situation.
I told myself that I would use 10% ($770) of the savings to buy my family something nice!
You borrow money to buy something and you never pay it back, and you feel justified? You should feel like a thief.
Would you want to be living that guy’s life? I wouldn’t. Way better things to do with your time than hanging out in courts and studying ways to avoid paying your debts.
Congratulations to the proud family of ChicagoWalkAway. Enjoy your new toys!
So Pez ......if a business goes bankrupt and doesn’t pay their creditors, they should be charged as thieves?
How about the untold amounts of millionaires that have been BK at one point or more of their lives? Are they thieves?
Why is it the working class that is only held to ethics and morals?
Yeah he’s a thief, but moral hazard in this country has already taken root. You are either a thief, or sit idly by as other people profit from gaming the broken system.
I’d game it.
Government workers can wait until their last year to get as much overtime and vacation pay so they have the highest pension when they retire. That’s gaming the system…and everyone should do it…and this will cause systemic failure which will finally lead to real change we can believe in, not obamas’ change.
game the system!
game the system!
game the system!
Not only is this deadbeat profiting from the system, but he is causing others to pay higher interest rates to make up for his behavior. Then, he comes on here and boasts about his “accomplishments.”
This guy is a prime example of why we should bring back debtor prisons.
Your frothing at the mouth about debtors prison for a guy who owed $5500, but you still vote for people who have allowed banksters to walk away with billions of taxpayer money.
Good ol’ Orange County. Next thing you know, ol’ Pez will want to bring back slavery….for debtors only of course. Perhaps “indentured servant” would sound better in republicanville no?
Whoa pal, don’t get your panties in a bunch!
I am not boasting, but this blog has many readers some of which may be in financial trouble. I was only trying to illustrate how I, a blue collar worker was albe to defend myself in court.
The law is the law, and it should apply to all of us equally, citizens, politicians, insitutions, and corporations. You do remember the consitution, right?
Corporations have a duty to follow the law, not ride roughshod over civil procedure because individuals are not aware of laws that are designed to protect them against false debtor claims. (False notes, forged documents, etc.)
I didn’t go into court to “game the system”. But after experiencing a situation in which two separate banks demanded that I pay them my mortgage, I am now from Missouri. You have to SHOW me the proof.
By the way sir, we already have debtor prisons: Citizens who are arrested for contempt of court because they violate a court order to pay their bills. No matter how bankrupt or insolvent they may be…..
“I felt justified, since I never had an agreement to pay any collection agency, or no specific memory of anything that the collection agency alleged in their complaint.”
I understand your point of view on this one. When the original lender sold the right to collect, they were basically writing it off.
I think most people have a guttural revulsion to debt collectors, and those who have no connection to the original lender are even more repugnant.
That being said, reactions like Pez Dispenser’s will also be common. For some the issue is more black and white. I think it would be easier to digest if you went through a bankruptcy so your debts could be legally purged.
“I think it would be easier to digest if you went through a bankruptcy so your debts could be legally purged.”
I understand your position, but that is just it.
With all due respect, my debt was legally purged when the debt collector was unable to prove standing as required in the IL Civil Code of Procedure and the IL Collections Agency Act.
I didn’t mean to imply what you did was not legal. The problem you will face is having to defend yourself over and over again. If you declare bankruptcy, you can wipe out all the old debts for good, and none of the zombie debt collectors can bother you again. Unless you do that, you will likely have to face repeated attempts by debt collectors to get something from you. It becomes a drain on your time.
It sounds like Illinois has some very debtor-friendly laws. Perhaps that will stop lenders from trying to enslave the population there. We can only hope.
Well, ya’ll better move to Austin like we did! NO STATE TAX and NO FALLING HOUSE PRICES! BBQ!
The Official assessment has prices in my neighborhood going up ten percent a year. I can’t tell you of too many other housing markets where this kind of appreciation still exists.
move to texas
that’s funny
when was the last time it rained there ? 2nd clinton term ?
and tell us a little about the school tax on your house ; u seem to have left that part out
I’ve had this argument with folks in my market area, Manhattan Beach. There’s a misconception that conforming loan limit changes don’t apply to markets where most homes are valued higher than the limit. If each market were its own isolated world then that might be the case. The truth is that everything is connected, and declines in prices for markets priced on the margin will effect everyone.