October brings about new changes that impact the U.S. housing market one way or another.
Jumbo loans are now less jumbo
As expected, the cutoff point where a government-backed conventional loan becomes a jumbo loan dropped lower on Oct. 1, 2011. Effective today, the federal government lowered the cutoff point where a conventional mortgage becomes a jumbo loanThis is done to encourage more private lending. The change impacts the maximum amount of a home loan that qualifies for funding through FHA, Fannie Mae and Freddie Mac. The impact in Florida will be less severe than in expensive housing markets elsewhere, however, since the maximum coverage amounts vary by region.
In addition, the maximum insured loan rates could still go higher should Congress choose to authorize it. The National Association of Realtors® previously issued a Call for Action, asking Realtors to contact their legislators. NAR says the lower convention loan limits will impact home sales at a time when the market cannot afford further stress.
You can search the database for new loan limits, both FHA and Fannie Mae/Freddie Mac, on https://entp.hud.gov/idapp/html/hicostlook.cfm.
More military can take advantage of HAFA
More military service members underwater on their homes may now be able to take part in the Home Affordable Foreclosure Alternatives (HAFA) program, allowing them to qualify for short sales and deeds-in-lieu of foreclosure. The Treasury Department clarified its guidelines for HAFA, after many military families complained that the program failed to consider a permanent change of station as a financial hardship. The omission prevented many from taking part in the program. The underwater military members say they were current on their mortgage until receiving orders to move.
“An example of such hardship includes a service member citing a ‘Permanent Change of Station’ order as the basis for his or her financial hardship when requesting HAFA, even if such service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly mortgage payments,” the Treasury said in a directive sent to mortgage servicers Thursday.
VA to cover higher loan fees
The U.S. Department of Veterans Affairs says it will cover extra costs for veterans who struck deals on home loans but now face the possibility of higher fees amid confusion over a federal law change. The problem involves a Sept. 8 notice from the Department of Veterans Affairs loan operations that said fee rates would be lower beginning Saturday. Congress delayed that lower rate until November.
The change would have forced lenders who already had deals on home loans to increase the fee or pay it themselves. It could have taken longer to close mortgage deals because the fees changed the loan’s terms.
VA spokesman Josh Taylor said fee differences will be waived if veterans had closed loans at lower rates than required with new legislation.
Source: The U.S. Department of Housing and Urban Development, “Treasury Moves to Help More Military Qualify for HAFA,” HousingWire (Sept. 29, 2011), “VA to Cover Extra Costs Amid Home Loan Confusion,” Associated Press.