Fannie Mae releases guidelines for the temporary increase in the conforming loan limit.

We may have a breakthrough... Fannie Mae has announced the timing of when they will be buying the new "Jumbo-Conforming Loans" as they are now calling loans between $417,000 and the increased limit of $729,750.  Fixed rate loans origninated after March 1, 2008 will be eligible for underwriting beginning April 1, 2008.  Fixed-adjustable loans, like  5/1 and 7/1 ARMs will be eligible begining May 1, 2008.

According to Fanne Mae's most recent update, they will have different (more stringent) guidelines for "Jumbo-Conforming Loans".  This does not come as a huge surprise.  It may, however, limit the number of people who will benefit.

"Jumbo-Conforming Loans", those between $417,000 and  $729,750 are subject to the following restrictions:

• Only 1 unit properties (no 2-plex, 3-plex, or 4-plex).
• When purchasing a new property:
  •  the minimum down payment is 10% with a 700 FICO score for fixed rate loans.
  •  the minimum down payment is 20% with a 660 FICO socre for a 5/1 ARM.
• When refinancing, no cash out is allowed.
• On a second home or investment property, a minimum of 40% down payment is required.
• Consolidating a first mortgage and a second mortgage is not allowed.
• Refinancing with 6 months of a purchase is not allowed (You must have owned the property for at least 6 months before you can refinance the mortgage into a "Jumbo-Conforming Loan").

Overall, these new guidelines will help some people get into a better mortgage at a lower rate.  Now may be a good time to do a "Mortgage Check-Up" to see if you could benefit from these changes. 

This information was provided by Stern Mortgage. For additional information contact Stern Mortgage Company at 650-322-7277

The house version of the economic stimulus bill approved by the House of Commons today would increase the conforming loan limit to as much as $729,750 in areas where home prices are highest. Conforming loans are loans that are guaranteed by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), thus making them more desirable for investors who purchase mortgages. Interest rates on conforming loans tend to be lower because they are less risky for investors. That is good news for borrowers.

Specifically, the approved bill permits Fannie Mae, Freddie Mac, and the Federal Housing Administration to guarantee purchase loans up to 125% of the median home price for a given area, but only until the end of 2008, with a cap of $729,750.00.

This is very good news for people in our area. In Palo Alto 463 single family residences were sold in 2007 with a median sales price of $1,555,000 (data from the Silicon Valley Multiple Listing Service.) In Santa Clara County, 4163 single family homes were sold through the Multiple Listing Service, with a median sales price of $905,000. Even if the new limits are approved, the $729,750 cap will not meet the needs of our clients, but it certainly will help.

The good news is tempered by the fact that the senate has its own ideas as to what should or should not be approved, and rumors abound that they do not want to increase the conforming loan limits. I encourage every person who is reading this article to contact Senators Dianne Feinstein and Barbara Boxer to request that they work to keep this provision in the senate version of the bill. You CAN make a difference! Thank you.

This is the weekly update from Coldwell Banker, Northern California COO, Avram Goldman:

The Easter Bunny, Spring break and the last (hopefully) of the rain put a bit of a damper on the market. We saw fewer multiple offers and listings come on the market. However that didn’t stop buyers in certain markets that seemed to power right through it---Central and Southern Marin, Danville, most parts of San Francisco, Palo Alto and parts of Menlo Park seemed unfazed. The San Rafael office had 17 opens for the week and So Marin had a $3.1 mil. home sell with 6 offers. In San Francisco we had strong multiple offer activity with the offices having between 25-50% of their offers involved in multiples and this figure does not include pre-emptive offers. A listing in our Van Ness office at $4.75 mil. received 5 offers. In San Mateo we had a listing at $1.248 mil. garnering 9 offers and a listing in Portola Valley at $1.325mil received 4 offers. These were all homes in inventory short markets that were priced competitively.

San Mateo and San Francisco counties still have a lack of inventory to supply the current demand. Overall inventories remain in the 2-4 month range for our markets. Again this reflects a balanced market. Open houses for the most part were active. Buyers are still more cautious than they were last year and most sellers still need to negotiate with buyers unlike a year ago.

With the weather clearing we will watch with great interest to see if more inventory begins to come on the market. Certainly, if that inventory is priced and presented properly we should see an increase in sales.

Here are the numbers for the week of April 10-16^th: 

5 offices reported increasing inventories, 19 steady and 3 declining---sales activity showed 5 offices increasing 16 steady and 6 declining.

Avram

I read in the paper last weekend that median home prices in Santa Clara County were down in April 2006 compared to April 2005. This is significant because this is the first year over year decrease in some time.

At first glance one might think that the much discussed bubble is finally showing signs of bursting, but be careful not to jump to conclusions. The article went on to explain that starter homes were still selling fast and with multiple offers, but more expensive and luxury home activity has slowed significantly.

It is important to understand that the median home price is simply the midway price between the highest and the lowest prices. If the median price decreases, it does not necessarily mean that the price of similar homes have decreased. If the number of expensive homes sold has decreased but the  number of less expensive homes remains the same, that alone will lower the median price.

First time buyers who are looking for a bargain may be sorely disappointed to find out that the home they could have bought for $750,000 this time last year is now selling for $850,000 this year, even though the median price has declined.

I continue to counsel my buyers to buy the home they love and plan to stay there for at least 3-5 years. Even if there is a temporary decline int he market, it is sure to rebound and become a good investment in the long run. And in the meantime, they will enjoy having a home of their own with all of the advantages that go along with it.

To search for homes for sale in the mid peninsula area, visit my website at www.Lmercer.com.