Would you like fries with your jumbo loan? Rates hit a historical low this week

Interest rates on jumbo mortgages fell below those of 30-year fixed rate mortgages for the first time in history, according to a report published by NAR today. Jumbo loans are those over the local limit that can vary from $417,000 to $729,750, depending on the county.

Since a significant number of homes in the South Bay are priced well within that range, the accessibility and availability of jumbo loans to qualified buyers is a critical part of a healthy housing market in our area.

Traditionally, jumbo loans have cost consumers more than a conforming 30-year fixed-rate loan. However, NAR found that "with mortgage rates much higher than a year ago and declining profits from refinances, banks have become more aggressive in pricing mortgages. As a result, it is now cheaper to borrow in the jumbo market which is currently dominated by private lenders."

This milestone in jumbo rates comes along at the same time that REALTORS are pressuring the Federal Housing Finance Agency (FHFA) not to reduce loan limits and effectively redefine what a jumbo loan actually is. NAR is still looking for assurances that FHFA will not unilaterally reduce loan limits just because it wants to; FHFA simply has no authority to do so.

Now, with the timing so close, are reduced jumbo loan rates and FHFA action somehow related? Probably not. To quote one of our favorite lines from The West Wing, "Hard to tell." Correlation is not causation, although the increased conversation is certainly welcome.

REALTORS talked, the Feds listened: No new restrictions on pre-foreclosure sales

As reported here and elsewhere this past week, the U.S. Department of Housing & Urban Development (HUD) had proposed to restrict real estate agents from dual agency agreements in a pre-foreclosure sale. Why? HUD's Inspector General believes to have found instances of fraud and abuse in the pre-foreclosure process, according to NAR.

This blanket restriction would have gone into effect on October 1, just a few short days from now. The REALTOR® profession takes fraud concerns very seriously. REALTORS around the U.S. adhere to a strict Code of Ethics that helps ensure that buyers and sellers can buy or sell their home with confidence.

In a letter to HUD on September 18, NAR said that it was presented with no data or evidence on which HUD based its proposal to restrict real estate agents in pre-foreclosure sales. While it is not clear how these restrictions would have reduced fraudulent activity, it is abundantly clear that they would have impacted the ability for some buyers and sellers to actually buy and sell their homes.

After dialogue between NAR and HUD - and after State and Local REALTOR Association Presidents around the U.S. joined in - HUD agreed to remove language referring to dual agency in pre-foreclosure sales. Meanwhile, REALTORS are part of the solution. NAR in its letter proposed a number of ways to address HUD's concerns about pre-foreclosure sales, including anti-fraud strategies that are already in use over at Fannie Mae.

Will HUD restrict REALTORS from working on pre-foreclosure transactions in a dual agency sale?

NAR last week expressed its concerns with a new FHA proposal to restrict real estate agents in certain pre-foreclosure transactions. In a letter sent to the Assistant Secretary on Housing on September 18, NAR President Gary Thomas argued that there are other ways that HUD could address concerns about meeting minimum net sales proceeds requirements.

Restricting real estate agents from working on certain pre-foreclosure sales puts homeowners at greater risk of falling into foreclosure if they cannot find a real estate agent, especially one who is knowledgeable about the short sale process, to list their homes.

Click here for the full text of NAR's letter.

REALTORS press the Feds to leave loan limits alone and stick to reforming Fannie and Freddie

This week, NAR expressed its dismay that the Federal Housing Finance Agency (FHFA) may, might, could, lower loan limits and raise fees - without any blessing from Congress. A firmly worded letter from NAR landed on the desk of FHFA Acting Director Ed DeMarco on September 17 asking him to step back from these housing killer proposals.

In part because Fannie Mae and Freddie Mac got into so much trouble during the housing crisis, Congress placed them into conservatorship to bring some urgently needed reforms. Congress also set policy in 2008 that federal regulators may not reduce loan limits without going back to Congress first.

Over at FHFA, this means that the agency is trying to reduce loan limits and raise fees all by itself, just because it says it can as a conservator. Not so fast - NAR reminded FHFA in its letter that it has no legal authority to do so. And even if it did, well that's just bad policy. After all, we do want to keep mortgages available for those buyers who qualify, don't we?

How does this affect your buyers? The short answer: Loan limits are the maximum value of a loan that Fannie and Freddie will purchase from a lender. Loans valued above these limits have little or no access to the secondary market, which makes them more difficult to fund. As the limits get lower, an increasing number of qualified homebuyers may be denied access to a mortgage to buy their home. This is not a good thing.

The issue of loan limits and the government's role in secondary mortgage market is much more complicated than we can explain here, so for more detail check out NAR's webpages on this topic.

Election Watch 2013: No paper? No printer? No problem!

Local elections are coming up in a city near you! Are you registered to vote? No? If you are not registered then your voice is not getting heard. But there is help.

Thanks to our friends at the Office of the California Secretary of State, you can register to vote online by clicking here:

http://www.registertovote.ca.gov/.


Your clients who just bought their new home can register too. If you have moved recently and did not re-register, then now is your chance. If you want to vote in your city's election on November 5, don't miss these deadlines:

• October 7 - Last day to register for vote by mail
• October 21 - Last day to register to vote