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9/16/2013

High Balance Mortgages Going going gone





A plan to lower the cap on federally backed mortgages may hit home buyers particularly hard in several pockets of the country. Here in California especially Orange County (my home town)  high cost mortgages are the norm, home buyers might be squeezed out because our government wants to get out of funding the
 
$ 417000 – to $625500 loan amounts. High balance mortgages will go away?
 
The Federal Housing Finance Agency plans to reduce the maximum size of mortgages backed by Fannie Mae and Freddie Mac this January 2014. The current limits are $417,000 in most parts of the country and up to $625,500 in more expensive markets. The agency hasn't announced how much it will lower loan caps, but data compiled for Market Watch by Lender Processing Services, a mortgage-data tracking firm, shows that a decline of just $25,000 from the current caps would impact hundreds of thousands of home buyers in middle-priced and upper-middle-priced housing markets — areas that are relatively upscale but far from the most expensive.
 
        In total, more than 214,000 of the agency-backed mortgages originated last year were within $25,000 of the current caps, according to LPS. For the first six months of this year, the number was just over 95,000. By one measure, they’re most in demand in Cook County, Ill., where 10,510 mortgages originated in 2012 and 4,137 during the first six months of this year were within $25,000 of current cap levels — the highest number in any county nationwide, according to LPS. In contrast, Manhattan, which has some of the most expensive real estate in the country, had just 1,187 and 460 of such large loans, respectively, for each time frame.
 
   Nationally, these loans have accounted for less than 3% of all Fannie Mae and Freddie Mac mortgages given to borrowers during this time, though the share is much higher in some regions. In Colorado, North Carolina and South Carolina as well as in the District of Columbia, they account for more than 5% of agency mortgages that borrowers signed up for last year. They had over a 10% share in three Colorado counties, Boulder, Denver and Gunnison, during the first half of this year.
 
A greater number of borrowers could be impacted if mortgage caps drop by a larger amount. Housing experts say a $25,000 drop is likely conservative, and if the real cut is bigger, more borrowers will be left with fewer mortgage options going forward.
There is an attitude of “let them eat cake.” In areas where the median priced home is $ 200000. Americans might feel that our government should not be spending tax dollars on helping luxury home buyers. The problem with this logic is for example in most of Orange County California there are little to no single family homes available for $500000. Putting a ceiling on all government funded loans at $417000 is going to squeeze entry level homeowners out of areas where there are high paying jobs.
 
Next year our industry will be hit with the Qualified Mortgage requirements (which means fewer borrowers will qualify) layered with lower loan limits and higher borrowing costs. Not great news for buyers and sellers, especially in Southern Californian where housing costs are among the highest in the nation. Right now may be the best time to sell or buy a home. You can always count on that next year things may be different.

 






 
Watermelon mint grapefruit salad

 As summer comes to an end- a simple fast dinner salad. Purchase  one of those smaller watermelons, since we are going on a smaller size in general... A pink grapefruit, small red onion, and fresh mint (come on over it grows like a weed in my garden). Slice thin. You can drizzle your favorite savory dressing or just a splash of vinegar and oil, salt and pepper.


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