In the midst of all the bad, I mean really bad news, this past week, their was some good news for homeowners in the high priced areas of the country. OFHEO, the government agency responsible for oversight of Fannie and Freddie Mac have raised the limit of loans that these agencies can securitize.

To find out if your county is affected please visit OFHEO's website: http://www.ofheo.gov/newsroom.aspx?ID=418&q1=0&q2=0 which has a PDF of those counties that are affected: http://www.ofheo.gov/media/hpi/AREA_LIST.pdf

Good news, right???

Maybe.

There are several important limitations which reduce the availability/usefulness of these loans.

First and most importantly they don't allow homeowners to take out a mortgage that allows them to cash out more than $2,000 at closing. That seems reasonable, but cash out includes using cash to pay off/down an home equity lines or loans. Thus homeowners who currently have a second loan or line will be unable to pay these off, but they will also have to secure permission from them to agree to this new loan. This may not be a trivial matter as some companies may refuse to do this.

There are other considerations including:

Property Type: Must be single family or condo
Credit: At least 660, over 700 for LTV greater than 80%
Debt to Income Ratio: At least 45%
Documentation: Full Documentation
Appraisals: Full interior and exterior appraisal required

Specifically excluded are:

1) 2,3,4 unit properties
2) Cash out refinances
3) One time close construction transactions
4) Cooperative properties
5) Second liens
6) Ballons

These new loans will be priced starting April, it is anticipated that the rate for applicants who qualify for these loans should see rates with a risk premium below that of jumbo loans in the market today.

Stay tuned...