6 Proposed Goverment Financing Changes
FNMA and FHLMC have proposed 6 major changes to help stabilize the housing and home financing market. These changes include:
1. The elimination of the "declining market" designation which forced lenders to reduce maximum financing by 5% in many markets (San Diego County included). Some individual lenders and investors will continue to use this designation but not loans that are directly sold to FNMA and FHLMC. This begins effective June 1st 2008. This is good news!
2. The raising of the "conforming" loan limits which went from $417,000 to $697,500 in San Diego. This has been implemented and the higher limits are currently in place. This allows buyers to obtain what would have been "jumbo" loans at lower rates and with lower down payment requirements.
3. The ability of certain property owners to refinance up to 120% of the appraised value of their homes if they are not behind in their payments. While this sounds good, it has a LOT of limitations and I anticipate that it will be little used.
4. A $10 Billion grant to states to assist first-time home buyers. This should help to fund bond and down payment assistance programs which are beneficial to many first time buyers!
5. The establishment of a "rent to own" program for first time buyers to help get them into properties. The idea is to reduce the number of foreclosed and REO properties, but this program is also somewhat restrictive and cumbersome and my best guess is that it will be little used.
6. The last proposal is the pricing of what are now being called "agency jumbo" loans (in SD County, these would be loans from $417,000 to $697,500) the same as regular conforming fixed rate loans. i.e. eliminating the premium charged for loans over $417,000 that are sold to FNMA and FHLMC. This would be great if it is implemented as it will make mortgage financing more affordable and assist more potential home buyers.
Remember, ALL of these changes (whether implemented currently or still in the "proposed" stage) are scheduled to end at the end of this year. The Mortgage Bankers Association and the National Association of Realtors are both pushing hard to these beneficial aspects to be implemented and extended (hopefully permanently). San Diego homes for sale
So how bad is it? I hear all these ramblings, fancy financial terms and so on. But what does it all really mean? Does the US collapse? Do we see soup lines and down trodden people like the experience was during the Great Depression? Seems to me the US financial catastrophe is pretty simple. Our government and the citizens of the US have consistently spent more than they take in. At some point the debt becomes so great we are unable to pay it back, or manage it. When we are no longer able to pay our debts what happens? Do we surrender assets, land and military hardware to the foreign nationals we’ve been burrowing money from over the last two decades? Maybe a fire sale of America? The whole system is a sham and we only have ourselves and those shysters in Wall Street and the Scum of Washington DC to blame..Sorry to say but, neither McCain, Clinton nor Obama will be able to save us from this SNAFU. The concept of uncontrolled spending and deficit through credit has finally caught up with us. This decade is perhaps a time for reckoning in which our short sighted ways and embrace of Wall Street’s psychopathic free market capitalism garnered by greed and unequaled corruption will finally get the best of us..
Jerry
Clinical Research
It seems San Diego has gone from boom to bust overnight
In the long term real estate always bounces back and people should take advantage of these slow periods if they really want to get a good return on their investments
Real estate should always be thought of as long term investments. People who buy properties whether in San Diego or anywhere else must realize that the potential for loss is ever present.
Tough times in real estate may change the San Diego conventional wisdom that you can never lose in real estate.
I’m buying a home not so much as an investment but as a place to live and raise a family.
I think people’s expectations of multiple digit appreciation each year in real estate is now proven to be a total fallacy.
Real estate homes should be thought of as just that and not investments.
It’s a shame to see people getting laid off. Hopefully things will turn around soon.
Homeowners should be prepared to ride out the current fluctuation, because in the long run values should continue to escalate.
Seems there should have been more government regulation and tighter qualification for subprime mortgages in order to prevent what we’re now facing.
What were the government regulators doing while banks and mortgage brokers were issuing these subprime loans?
It seems speculators were first into the dot com boom, when that went bust they moved into real estate and now it seems like they’re moving into commodities.
Real estate speculators should not be bailed out by the government.
San Diego is a great place to live, but all the residents here pay a huge weather premium in the value of their homes.
In 2005 most of the commenters on the real estate market were saying there’s no bubble and our mini boom would never end, this is a sure sign that an end is fast approaching.
I believe there was a show on TV called” Flip This House” for real estate speculators this was another sign of an overheated bubble.
It’s just surprising that so many people with the clear signs that were present in 2004 and 2005 didn’t say that the San Diego real estate bubble was about to bust.
Joe
Acne Specialist
Yes house prices might fall even more than during the great depression but maybe there are just different drivers and each depression will be driven by completely different circumstances. Maybe a recession would not be a bad thing over the long run.
Ronald
Hotels and Tourism