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Archive for September, 2008

VA and FHA Higher Loan Limit Extension Through 2011: The Main Street Bailout

We don’t have a “Main Street” in Southern California; we have the US Route 101 (or CA State Highway #1). We call it the Coast Highway, the Pacific Coast Highway, or the PCH.  When I think of a bailout plan for Main Street, I think of it for homes within 5-10 miles of the PCH.

We got that “Main Street bailout” a few months back.  FHA loan limits were hiked to as much as $729,000, earlier this year and the VA followed suit, this summer.

Both provisions are gone after Christmas…unless…

…President Bush gets to leave a legacy for the Main Streeters on the coasts.  The scuttlebutt in D.C is that President Bush wants to extend the life of those temporary loan limits, for FHA and VA, through 2011.

This program has helped us a lot.  Consider that California loan originators have funded more FHA product in August, 2008 than we have in the prior two years.  When declining market conditions limited agency jumbo loans to 85% loan-to-value, FHA picked up the slack.  With the tenuous outlook for PMI companies, FHA and VA jumbos are filling the vacuum for new home buyers.

It is further rumored that these “guvvie jumbos”, limited to purchase transactions, will be made available for refinance transactions; 100% loan-to-value for VA and 95% loan-to-value for FHA.  The rumor is that President Bush believes that government financing can provide relief for homeowners stuck in jumbo ARMs, soon to be adjusting.

It’s conjecture at this point but we may just have these loan products until 2011.

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