GSE limits slated to drop (PLUS bonus question for mortgage experts)

[bearishgurl]

[quote=briansd1]…One question is if the lower GSE limits won’t affect anything much, then why are the Realtors fighting them? Do they know something we don’t know?[/quote]

brian, the amount the GSE’s will lower their guarantee (from the current approx $729K) will differ region to region. Nationwide, it used to be $417K. It is not predicted to go below that. $417K is 80% of $521,250. In areas where Fannie/Freddie lower their guarantees back to this amount, it will cover properties in that area priced up to $521,250 if a standard 20% is put down by the buyer. The buyer always has the option to put down more to get a conforming loan. In TX and GA, for instance, $521,250 will buy a VERY large “McMansion” type home on a 1/2 AC+ lot in a prime area. In San Mateo County, CA, it will buy a 1000 sf postwar box situated under the SFO landing path. Of course, the GSE guarantee will not be lowered to mortgages =<$417K in San Mateo County, CA. It will likely be in the 600K range there. The lowering of the GSE's guarantee will not affect cheaper housing states like TX and GA very much, if at all. It will not affect premium "niche coastal markets" on either coast where a typical buyer has many resources to employ in the purchase of RE and commonly does. In SD County, I predict it will adversely affect the value of tracts in INLAND areas adjacent to prime coastal areas where prices ARE AS MUCH AS OR CLOSE TO coastal prices but the house itself (not necessarily the lot) is much bigger and newer. That is, the =>$680K properties in the 56 corridor, inland Chula Vista annexations, Poway and surrounds, Scripps Ranch, North County Inland and other areas where younger people commonly buy into who need mortgages. I can’t say how much these areas will devalue, though. Perhaps the private mortgage lenders will step up to the plate and make their application processes more streamlined, as it was in the past and thus appeal to moderate, middle income and upper-middle income buyers. When the “portfolio” mortgage is being utilized again, it will be a viable choice to a F/F backed mtg. We shall see.

We will not know how much the RE in a given area or state will devalue due to the lowering of the guarantee on conforming loans until the new guarantee amount is set in each housing area in every state.

[patientrenter]

[quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.

[patientrenter]

[quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.

[patientrenter]

[quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.

[patientrenter]

[quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.

[patientrenter]

[quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.

[Coronita]

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[Coronita]

[quote=patientrenter][quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.[/quote]

My guess?

Lower the limit, but also lower the bar for people to qualify…. You heard it first from me……

Afterall, if there’s any track record of doing this, just look no further than General Motors and Chrysler…Where essentially they have once again extended credit to sketchy people that can barely pay so that they can move those cars off the lot….

Also, didn’t wells fargo drop the minimum credit score for FHA loans from 600 down to 500 back in Feb/2011??? LOL!

[Coronita]

[quote=patientrenter][quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.[/quote]

My guess?

Lower the limit, but also lower the bar for people to qualify…. You heard it first from me……

Afterall, if there’s any track record of doing this, just look no further than General Motors and Chrysler…Where essentially they have once again extended credit to sketchy people that can barely pay so that they can move those cars off the lot….

Also, didn’t wells fargo drop the minimum credit score for FHA loans from 600 down to 500 back in Feb/2011??? LOL!

[Coronita]

[quote=patientrenter][quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.[/quote]

My guess?

Lower the limit, but also lower the bar for people to qualify…. You heard it first from me……

Afterall, if there’s any track record of doing this, just look no further than General Motors and Chrysler…Where essentially they have once again extended credit to sketchy people that can barely pay so that they can move those cars off the lot….

Also, didn’t wells fargo drop the minimum credit score for FHA loans from 600 down to 500 back in Feb/2011??? LOL!

[Coronita]

[quote=patientrenter][quote=walterwhite]after all this effort to prop up the housing market, doesn’t it just seem like there has to be a catch; like, we’ll lower the limit, but give you a tax credit for the difference, or these are the new rules, but if we begin to notice it has any bad effect, we’ll immediately revoke them and go back where we were, or some other freaky shenanigans.[/quote]

Exactly. A very accurate summary of public policy. Not bad for someone who wonders what the point of anything is.[/quote]

My guess?

Lower the limit, but also lower the bar for people to qualify…. You heard it first from me……

Afterall, if there’s any track record of doing this, just look no further than General Motors and Chrysler…Where essentially they have once again extended credit to sketchy people that can barely pay so that they can move those cars off the lot….

Also, didn’t wells fargo drop the minimum credit score for FHA loans from 600 down to 500 back in Feb/2011??? LOL!

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