The XBroker: Jeff Corbett (7DS Associates)

There seems to be some varying opinion on how to interpret loan limit increases for Conforming and FHA type mortgages.

I've read articles here that suggest a $650k Conforming loan limit while FHA mortgages will set a new limit based on (max) 175% of the subject property's County Median Home Price, while Matt Carter at Inman News posted his own thesis. I was admittedly confused after reading Matt's article due to how he was interchanging the terms 'FHA' and 'Conforming', though after reading the Bill, it all makes a bit more sense...just a bit.

The Bill seems to indicate that both Conforming and FHA will adopt almost identical loan limit valuation methodologies-with a few intricate differences:

Conforming loan limits will adopt the greater of the current limit ($417k) or between 125% and 175% of the subject property's County Median Home Price (TBD by HUD) value. So, Conforming loan limits will remain at least $417,000, with the potential to be as a high as $729,750., depending on where the property is located.

FHA approved loans will adopt limits between 125% and 175% of the subject property's County Median Home Price (TBD by HUD) value. According to HUD's website, the FHA mortgage limit for a home in Collin County Texas is $200,160 would be increased to $281,250 ($200,160 x 125%), unless some other provisional measures are met (which I've yet to interpret) allowing a higher loan limit all the way up to $729,750 (hypothetically, at least in Collin County Texas).

There are alot of variables still in play here. Carter raises a good question by asking 'where the data will come from in determining the median values and how often will they change?'

This will be interesting to watch...
What's clear is that the biggest beneficiaries of this Bill passage are:

#1 California (and other inflated real estate areas of the country).

#2 Borrowers who are solid sub-prime candidates in housing that is relative to their income and asset levels. The FHA changes stand to benefit a slew of otherwise 'stuck' Alt-A and sub-prime borrowers, but not nearly all of them. If you are a borrower that got by on a NINJA (No Income, No Job or Assets) loan last go round and need another one, you're still stuck.

#3 HUD's secretary who shall garner the attention of many lobbyists.

Both sets of changes will be temporary, lasting until 12/31/08...although I don't see how you step backwards once you've stepped through. In any case, check with a trusted mortgage professional sooner rather than later regarding whether you should refinance.
Here are the sections of the Bill straight from the Library of Congress' website (read at your own risk):

SEC. 201. TEMPORARY CONFORMING LOAN LIMIT INCREASE FOR FANNIE MAE AND FREDDIE MAC.

(a) Increase of High Cost Areas Limits for Housing GSEs- For mortgages originated during the period beginning on July 1, 2007, and ending at the end of December 31, 2008:

(1) FANNIE MAE- With respect to the Federal National Mortgage Association, notwithstanding section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)), the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Association shall be the higher of--

(A) the limitation for 2008 determined under such section 302(b)(2) for a residence of the applicable size; or

(B) 125 percent of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation for 2008 determined under such section 302(b)(2) for a residence of the applicable size.

(2) FREDDIE MAC- With respect to the Federal Home Loan Mortgage Corporation, notwithstanding section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Corporation shall be the higher of--

(A) the limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size; or

(B) 125 percent of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size.

(b) Determination of Limits- The areas and area median prices used for purposes of the determinations under subsection (a) shall be the areas and area median prices used by the Secretary of Housing and Urban Development in determining the applicable limits under section 202 of this title.

(c) Rule of Construction- A mortgage originated during the period referred to in subsection (a) that is eligible for purchase by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation pursuant to this section shall be eligible for such purchase for the duration of the term of the mortgage, notwithstanding that such purchase occurs after the expiration of such period.

(d) Effect on Housing Goals- Notwithstanding any other provision of law, mortgages purchased in accordance with the increased maximum original principal obligation limitations determined pursuant to this section shall not be considered in determining performance with respect to any of the housing goals established under section 1332, 1333, or 1334 of the Housing and Community Development Act of 1992 (12 U.S.C. 4562-4), and shall not be considered in determining compliance with such goals pursuant to section 1336 of such Act (12 U.S.C. 4566) and regulations, orders, or guidelines issued thereunder.

(e) Sense of Congress- It is the sense of the Congress that the securitization of mortgages by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation plays an important role in providing liquidity to the United States housing markets. Therefore, the Congress encourages the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to securitize mortgages acquired under the increased conforming loan limits established in this section, to the extent that such securitizations can be effected in a timely and efficient manner that does not impose additional costs for mortgages originated, purchased, or securitized under the existing limits or interfere with the goal of adding liquidity to the market.

SEC. 202. TEMPORARY LOAN LIMIT INCREASE FOR FHA.

(a) Increase of High-Cost Area Limit - For mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008, subparagraph (A) of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) shall be considered (except for purposes of section 255(g) of such Act (12 U.S.C. 1715z-20(g))) to require that a mortgage shall involve a principal obligation in an amount that does not exceed the lesser of--

(1) in the case of a 1-family residence, 125 percent of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation determined for 2008 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation determined for 2008 under such section for a 1-family residence; or

(2) 175 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitation with respect to properties located in Alaska, Guam, Hawaii, or the Virgin Islands);

except that the dollar amount limitation in effect under this subsection for any size residence for any area shall not be less than the greater of (A) the dollar amount limitation in effect under such section 203(b)(2) for the area on October 21, 1998; or (B) 65 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size. Any reference in this subsection to dollar amount limitations in effect under section 305 (a)(2) of the Federal Home Loan Mortgage Corporation Act means such limitations as in effect without regard to any increase in such limitation pursuant to section 201 of this title.

(b) Discretionary Authority- If the Secretary of Housing and Urban Development determines that market conditions warrant such an increase, the Secretary may, for the period that begins upon the date of the enactment of this Act and ends at the end of the date specified in subsection (a), increase the maximum dollar amount limitation determined pursuant to subsection (a) with respect to any particular size or sizes of residences, or with respect to residences located in any particular area or areas, to an amount that does not exceed the maximum dollar amount then otherwise in effect pursuant to subsection (a) for such size residence, or for such area (if applicable), by not more than $100,000.

(c) Publication of Area Median Prices and Loan Limits- The Secretary of Housing and Urban Development shall publish the median house prices and mortgage principal obligation limits, as revised pursuant to this section, for all areas as soon as practicable, but in no case more than 30 days after the date of the enactment of this Act. With respect to existing areas for which the Secretary has not established area median prices before such date of enactment, the Secretary may rely on existing commercial data in determining area median prices and calculating such revised principal obligation limits.

Passed the House of Representatives January 29, 2008.

Thanks to Library of Congress website...

There is a growing list of websites that have received the shiv from NAR for using 'Realtor' in their name, url etc. AgentGenius (formerly RealtorGenius.com, prior to the 86 from NAR ) is one of these victims.

Would anyone who happens upon similar beat downs please let me know via comments? There are a bunch of similar 'stories' out there and figured this would be an efficient way of watching a car wreck.

I've started an appropriate link-roll category for such victims, starting with Agent Genius b/c they are a high quality site who was repressed by the man, although I am open to sharing 'sites that probably will be eighty-sixed by NAR' too...

I'm one to write diatribes. I have this internal claw that directs me to carefully articulate my topics by preemptively covering all angles (and potential rebuttals) as a reader takes the time to digest my left (or right) of center opinions.

This can get, mmmm, tedious at times. I don't like tedious but I've been of the mindset that if someone is going to take the time to read my stuff, I should put out my best...thus the resulting diatribe-itus.

Two 'things'...one is a service, the other is a person...have led me to see and blog otherwise.

Twitter is a service in and of itself that consists of a user entering 4-5 line max 'thoughts' or 'What I'm doing' blurbs that may not seem significant in singular, but when read across a time period, can really give you insight into how and/or who a person is. Initially, I thought Twitter was lame, now I find myself 'Twittering' on a few platforms.

The person is Dustin Luther and his site 4Realz.net. Dustin needs no introduction to those familiar with the re.net (a term coined by Greg Swann, another influencer in this) space, but in case you haven't heard of or read about him (welcome out from under the rock) he is a pioneer in and for the social networking aspects of real estate. I thoroughly enjoy 4Realz (and Dustin) because it (he) practices what I call Microblogging, a few lines or paragraphs tipping hat to whats interesting to him, which I find interesting. I read 4Realz.net every day because I know it will take me <30 seconds and lead me somewhere interesting, either in my own head or else ware in the Web.

Both 'things' have influenced me to the point of practicing MicroBlogging...its a refreshing alternative to the diatribe :) I encourage other bloggers to practice Microblogging as well because it allows your audience to get to know you quicker. Real estate and mortgage transactions will always have a personal relationship factor to them, regardless of technology and resulting levels of disintermediation. Although I've only met Dustin 3 maybe 4 times, and we've only exchanged cursory level handshakes and well-wishy conversations, I feel like I know Dustin far better than our personal interactions would typically dictate.

All real estate and mortgage professionals could benefit from the simple dynamic Microblogging creates...a quick interesting conversation about relevant topics.

I blog, therefore I am? (Rhetorical question)

After the dizzying experience of clearing out my Google Reader, I’ve come to the conclusion that 90% of blog posts suck. Too many blogauthors write just to write, taking us down the boring path of traditional journalism, writing about whats been written about.

If you’re re-reporting whats in the newspaper et al, spare me the noise.

Don’t blog just to blog. I’m looking for an angle, a real novel opinion…not re-digested fodder about what I can read in the Wall Street Journal or USA Today.

What makes a good blogauthor? One who writes the posts that others post about, and link too. What makes a great blogauthor? One who writes the posts that others post about, but don’t link too. In either case, a good blogger inspires, actually provokes thought rather than instills beliefs, and moves other people into action.

Blog when you are moved to do so, not just to ‘improve your SEO’.

Blog with conviction, not political correctness.

Blog like you don’t give a damn what that other idiot thinks.

Blog like no one is going to read you.

Blog what you want to blog about, not what you think others will like to read.

Bloging must maintain a rawness that ought never be tainted by the laws of conventional wisdom.

Blog because you care about the conversation, not traffic results.

Blog under these conditions, and You Shall Be…

This is a Bryant Tutas inspired post :) 

People seem to take my thoughts or suggestions as if they could exist in a vacuum, which they most certainly cannot. As you read on it should become more apparent that these ‘Twitter-esque’ suggestions are about general philosophies and solid business practices, not an end all be all ‘if you don’t implement everything I write about you’re DOOMED’, as some people seem to try and digest and regurgitate it as. Very few things in life are all or nothing, so stop being so rigid and allow your personal context to open a bit. I do know one thing for sure though: Any and all of these steps work, because at one time or another I’ve exercised every one, practiced what I’m preaching…However I choose to spin these steps, they work in theory and practice.

You’re not a Twinke. It warrants stating the obvious, that the wide scope of these posts about ‘running a mortgage business’ in todays and tomorrows markets are about the Art of Reinvention. The shelf life of a business is about 2-3 years, then it starts dying…today a business must consistently reinvent itself or it will die. This is the Information Age where ‘Life Comes at you Fast’, you gotta be quick, nimble, and otherwise ready to change at a moments notice..case in point, the mortgage (and real estate) industry has changed more over the past 5 years than the previous 30+. I personally owned an operated a mortgage (as well as a real estate) brokerage for 8 years, and no less the 4 times it was ‘reinvented’… marketing, business structure, process flows, financial strategy all rehauled to change with the times.
Step Seven. Don’t ever say or advertise that a mortgage is ‘no cost’ or anything to this effect. Doing so should get one fired (and shot) on the spot.

If you’re a consumer and are thinking ‘I think I’m going to go with that mortgage company that’s offering a no closing costs loan’, that mortgage company is getting ready to bilk you for enough money to cause you buyers remorse on a clinical level. With all the (sensational) news that has permeated the universe over the past year about the racketeering-like mortgage industry, if you still think that a mortgage is in any way ‘cheap’ or ‘free’, you need to assign a durable power of attorney to someone with more sense than you.

Step Eight. Stop explaining the fee to do business with you in terms of a %. WTF does a % of a homes value have to do with how much you make? While it may make great sense to you, it’s really the most illogical way to ’sell’ yourself and services. Consumers are getting brighter, people like me are telling them to avoid mortgage pros who try and justify that ‘a point (or whatever) is very fair in todays market’. Valuing mortgage services in terms of a percentage will be portrayed as assuming a consumer dumb and docile, for which they will not do business with you…so stop insulting them and talk in dollar$.

Step Nine. Right up front, tell every potential client that you’re not going to be the cheapest mortgage pro they’ve dealt with, nor will you be the most expensive. By telling the consumer your fee and justifying it with tangible service and knowledge parameters, you set the playing field to make any other mortgage monkey they talk to compete on this turf, and most can’t.

Step Ten. Learn how to and/or implement a digital database management/marketing strategy. No, your Loan Origination Software is typically not good enough.

Step Eleven. Repeat after me…”I cannot make $10,000(+) on a single loan anymore”…

Step Twelve. Start a blog. Abandon your current dinosaur of a website from Myers, Lion, etc etc and move your web presence to a blogging platform, preferably one that isn’t proprietary since the ‘open source’ options available out there are stable and fantastic, not to mention that proper support is deep and easy to find. A blog is no longer just a tool to write journalistic online articles for all to revel in your omniscient brain (in case you’ve been under a rock or high on some). Blogging platforms are evolved web-sites that allow you to create, even better: Recreate you and your business on the fly. Changing a traditional website platforms look/feel/functionality is either expensive or just short of an act of God to pull off. For these same reasons avoid said proprietary platforms that can only be configured by a select few individuals.

Mortgage blogs pale in comparison to their real estate cousins in number and quality, which is a great reason to start now. At Inman Connect NYC 2007, I dropped in on one mortgage panel that had the founder of LowerMyBills.com as a panelist. When the panel was asked by the moderator about blogings potential effect on the mortgage world, everyone pretty much shrugged with a ‘Duuuhr’ look on their face until LowerMyBills spoke up and stated he thought (im paraphrasing) ‘that consumers wouldn’t identify with a mortgage blog nor was their much value in them’.

Step Thirteen. Move, act, and market yourself in direct contrast to yesterdays ‘industry leaders’, not doing so will continue to lower your business.