Fannie Mae Announces Increased Jumbo Guidelines and Rate Adjustments

One of the most highly anticipated days for Originators and Homeowners alike, has finally arrived: Fannie Mae has announced the new Jumbo Guidelines. This will undoubtedly lead to many more loan applications as Jumbo Loan Note holders will want to take advantage of this small window of opportunity (the new limits are temporary adjustments good only through December 2008.) So while other sites will surely rip the announcement and the program because of the impossible-to-live-up-to hype and the somewhat limited guideline changes, this is still great news for Originators and Homeowners.

What specifically is the good news?

• Increased loan limits (Specific County Increases)
• 30-Year and 15-Year Fixed Loans Offered starting April 1 (5-year ARM offered May 1)
• Purchases up to 90%
• Refinances up to 75% CLTV (no cashout refi) and 95%(!) CLTVs (probably subordination allowances)
• Up to 45% DTI ratio
• 5/1 ARM to have Interest-Only Option as well

There are certainly some limitations to the new product offerings: no cash-out refinances, manual underwriting, and no Stated Income option will all pose problems. But as any Originator can tell you, anyone who has recently purchased or refinanced a Jumbo Loan amount probably got into an ARM. Jumbo Fixed loan options had such ridiculously high rates due to secondary market problems, that the only programs that Jumbo Loan holders could take were short-term. These people will jump at the opportunity to lock into something stable. And if there were a select few of those people who actually stomached a late ‘07 or early ‘08 30-Year Jumbo, they will be ecstatic at the chance to lower their rates too.

If you’re an Originator, comb through your files and start calling those “Jumbo” note holders; if you’re a Home Owner, call your trusted Loan Officer and take advantage while you can!

Tags: Fannie Mae, Jumbo Loans