Fannie Mae loan limits for high-balance mortgage loans are scheduled to expire on September 30, 2011. Barring congressional actions, the “temporary” loan limits now in place will expire on that date and loans with mortgage note dates on or after October 1, 2011 will be subject to the “permanent” limits. Many of our clients and agents have questions regarding the expiration. The following are some of the most frequently asked questions.

 Are the loan limits definitely expiring? What would it take for them to get extended or changed from the permanent loan limits?

 Congress would have to take action to extend or revise the temporary loan limits, which were originally put in place through the Economic Stimulus Act of 2008 and have been extended through a series of additional legislative actions to provide support to the mortgage market during the U.S. housing crisis. The most recent extension for Fiscal Year (FY) 2011 occurred last fall under a continuing resolution. The February report to Congress by the Departments of Treasury and Housing and Urban Development (HUD) stated “the Administration recommends that Congress allow the temporary increase in limits that was approved in 2008 to expire as scheduled on October 1, 2011 and revert to the limits established under HERA [Housing and Economic Recovery Act].” As such, Fannie Mae does not expect any further extensions.

 What will happen in 2012? Could the permanent loan limits go down?

 As a result of the permanent authority for HCA loan limits established under HERA, the Federal Housing Finance Agency (FHFA) is required to evaluate loan limits annually, and revise limits accordingly. The first set of HERA loan limits (a.k.a. “permanent” loan limits) was established for calendar year 2009 based on the median home prices for the HCA Metropolitan Statistical Areas (MSAs) provided by the Federal Housing Administration (FHA)/HUD. While there have been median home price declines over the past three years, FHFA followed a policy to “not permit declines relative to the prior HERA limits.”

 Several months ago, FHFA and Fannie Mae published the permanent loan limits applicable to loans originated on or after October 1, 2011, and which are acquired by Fannie Mae in 2011. Therefore, no changes are expected to those permanent limits between October 1, 2011, and December 31, 2011. FHFA has not indicated whether it will continue its policy of not permitting declines in HERA-based limits beyond 2011. If FHFA does not maintain its policy of not permitting declines in the HERA-based HCA loan limits, 2012 loan limits could decline from those that will apply in the fourth quarter of 2011.

 FHFA has not yet published the HERA-based limits applicable to loans Fannie Mae will acquire in 2012, nor has it indicated when it will do so. However, standard practice has been for FHFA to release the upcoming year’s limits in mid-November each year.

 Are you expecting any eligibility and pricing changes related to this expiration?

 None is expected at this time.

 How many borrowers are affected by the expiration of the temporary limits?

 According to Fannie Mae a relatively small number of borrowers needing to finance loans are in the affected range. Certain markets will be significantly affected. Data gathered by the FHFA on acquisitions of these loans by the government-sponsored enterprises (GSEs) in 2010 showed significant clustering of the larger-balance mortgages in California and a small number in other states. According to the FHFA data, roughly 6 out of 10 of loans originated with loan amounts above the permanent limits but meeting the temporary limits came from California. Massachusetts, New York, and New Jersey collectively accounted for a further 20 percent. Twenty-six U.S. states had no purchase by the GSEs of the higher-balance loans.

 The expiration of the temporary loan limits will certainly affect the interest rates a borrower will pay on a loan over $417,000. The current spread between a Fannie Mae 30 year fixed and a Jumbo 30 year fixed is around .6%. In the summer of 2008 the average spread was .2%. This spread is likely to narrow over time as credit conditions improve. The most important factor will be the expansion of jumbo product into the market place which we will cover in our next post.

 The expiration of high balance loan limits coupled with the historically low and artificially deflated interest rates all point to this being one of the best opportunities to purchase or refinance a home.

RPM Mortgage’s San Diego branch recently announced that it will be partnering with Real Living Lifestyles, formerly Windermere Exclusive Properties.

Real Living Lifestyles - Real Estate is a new company locally owned and operated by Steve Rodgers, Jim Browne and Mark Loscher. The group selected RPM Mortgage as the preferred lender because of the outstanding reputation and experience they share within the San Diego community.

“RPM Mortgage San Diego has been a great mortgage fit for our company, agents and clients,” said Rodgers. “Todd Pianin and his entire team are at the top of their field on customer service, product knowledge, client choice and pricing. They go above and beyond and strive to exceed each individual’s needs. If you need a loan with wisdom, care, confidence and all your needs met then this is your group of experts to get it done!”

Real Living Lifestyles includes eight offices throughout San Diego County with nearly 400 real estate agents. The Lifestyles company is a part of the larger corporation, Real Living Real Estate, which is a full-service real estate brokerage franchise company that opened in 2002. The company has branches located in Carlsbad Faire, Carlsbad Village, Carmel Valley, Escondido, Fairbanks Ranch, Encinitas, Rancho Bernardo and Solana Beach.

Rodgers decided to move his organization to Real Living because it is a much larger, global organization that has an agent focused business model that holds more opportunities for his company. Real Living is owned by Brookfield Residential Property Services which is a leading global provider of real estate and relocation services, technology and knowledge.

Todd Pianin, Branch Manager of the RPM Mortgage San Diego branch, was ecstatic about the opportunity to work with such a large and well respected real estate company such as Real Living Lifestyles.

“We are super excited about the fresh new franchise that Steve Rodgers has made with Real Living,” said Pianin.  “The fact that Steve selected us to be Real Living Lifestyles” in-house lender proves to us that we have earned the respect not only of Steve, but of the San Diego community as well. We are honored that such an established group has selected us to be the mortgage partner for their new company.”

Rob Hirt, CEO of RPM Mortgage has known Rodgers for a long time and respects his work and reputation that he has built for himself in San Diego. He is pleased that RPM now has a strong partnership with Rodger’s new organization and that they can build upon this new partnership together.

“Steve Rodgers is a legend in Southern California for his professionalism and expertise in guiding Realtors toward being more successful,” said Hirt. “Todd Pianin and Steve have forged a strong bond and working relationship and I am humbled that Steve has chosen RPM to be his in-house lender. We are extremely excited about our future involving Real Living Lifestyles.”

RPM Mortgage, Inc. is based in Walnut Creek and is a private, family-owned mortgage banker and broker whose roots in the Bay Area stem back to 1986. RPM has 46 branches in California, Nevada, Texas, Idaho, Colorado and Connecticut and over 700 loan agents and employees. RPM Mortgage is a retail only lender and a direct seller and servicer of Fannie Mae loans. In 2010, RPM closed over $4.55 billion in originations, with $1.3 billion of the originations being service-retained loans. RPM’s loan agents are specially trained to offer FHA, VA and CalSTRS loan programs to their customers. They work with borrowers, realtors, CPA’s, financial planners, attorneys and financial consultants to provide home buyers and owners with the best financial solutions in the market today.

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For more information, please contact Todd Pianin at 858.259.4014.

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“Thanks for getting my second loan.  The process was smooth and painless.  Your staff always returned my calls and kept me aware of any changes.  Also, appreciated Todd taking time and explaining things to me.  I would definitely recommend my friends and family.”         – Martin Hooshnam, recently closed client

“Todd and Tycia were outstanding from a customer service perspective.  They painstakingly answered all my questions thoroughly.  Todd and Tycia knew the answers without having to consult any documentation this spoke lengths how qualified they were.          -  Jesse Chan , recently closed client

“I felt at ease throughout the transactions that the loan was being handled professionally.  I was kept informed along the way and my phone calls and emails were answered in a timely manner.  In my business as a real estate agent this is of the utmost importance.  Great job!.”     -Carol Legeder, Prudential California Real Estate Agent

“ A professional dedicated team, honest and trustworthy in ALL dealings with me!  Understood my concerns and kept me well informed throughout the process.”                          - Guido Portante, recently closed client  

We can help you with all your residential lending needs including purchases and refinances, FHA and VA transactions.  We ask you to refer your friends and family to a trustworthy company, Samuel Scott Financial Group.  

We can be reached in the office at 858-259-6070 or check us out online at www.samuelscottfg.com

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