Here’s a quick update update on the status of the temporary increase in conforming and government loan limits:

• HUD issued the new conforming and FHA 203B loan limits late yesterday 
• GSE (Fannie Mae & Freddie Mac) loans have increased in about 250 counties – maximum loans are as high as $793,750 in Honolulu and $729,750 in some areas of the continental US
• FHA loans have had increases both in terms of the same high cost areas noted above and low/moderate income areas where the minimum maximum FHA loan increased to $271,050

What We Know and Don’t Know At This Point:

• Currently FHA has not indicated that they will change their loan level guidelines – this would allow for max LTV’s of 97.5%
• Fannie Mae & Freddie Mac have indicated they will have more conservative guidelines and are awaiting OFHEO (secondary market) approval before publishing 
• Program availability will be limited – initially 30 year fixed, 5/1 and 5/1 interest only are the likely products
• There may not be cash out refinances, non-owner occupied, or 2-4 unit GSE loans despite the fact that HUD published county limits for these loan types
• It is likely that maximum GSE LTV’s will be 90% and may be even lower for rate/term refinance loans
• It is likely that there will be a minimum FICO floor established
• There are a lot of unknowns in the final guidelines that are stopping us from being able to program or publish any program specifics at this time

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3% Down – 585 FICO
6.5% Interest Rate - Up to $729,000

Hot off the Press from my friend Kamila Harkavy at Pacific Mortgage Consultants

How’s that sound for a California home buyer? The $729K is the new conforming loan rate and will depend on the county. This is a better rate than people with 800 FICO’s were getting 7 months ago on conforming loans under $417K

That's a 30 year fixed loan for FHA!!!  For someone with a 585 FICO and only a 3% down payment, this is an incredible opportunity to take advantage of in this buyers' market.  These rates are in effect only through 2008 so people should not wait too long.

This same FHA loan is available for cash-out refis too.  People don't have to have any cash reserves in the bank and there's NO pre-payment penalty!!!

This same loan would have come with an interest rate much higher than this in the recent past.

Please note - this loan requires the borrower to fully document their income.

Many people with good credit will be taking advantage of this loan for refis and for purchases due to the high loan-value ratio which is very hard to find in today's mortgage market.  Few lenders will loan to that high a ratio and certainly not at a blended rate of a first and second mortgage of 6.5%!!.

Buyers may be able to find highly motivated sellers who will cover some or all of their closing costs at which point, all they need is a 3% down payment and qualifying income to become a homeowner!

Last night, the Meeses hosted a Pre-Auction Martini Party at their house. Parents of students at Greenbrook Elementary School are holding their annual auction to raise money for school projects.

The theme of the auction is James Bond,so Ginny Mees decided to serve martinis "shaken not stirred." The guests stirred things up quite a bit, the auction has raised over $25K a week before the main event.

I managed to get Ian Barlett from Diversified Capital off to a quiet corner to give us his thoughts on what we can expect in the mortgage industry the next few months.

Here are a couple shots of the event: