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For the remainder of 2008, HUD has increased FHA loan limits to help borrowers.

HUD has announced the new FHA limits ($410,000 in the 6 collar counties and $271,050 in most other counties)

Call for more details on limits for the 4unit properties.

As noted for some time, many experts believe that FNMA & FHLMC being able to buy higher loan balances won’t cause a total reversal of the mortgage-banking slump. The higher loans could have fee adjustments, it may expire at the end of the year, and it won’t correct the guideline changes or cause their property value to increase, giving many much-needed equity. The Department of Housing and Urban Development will calculate the new loan ceilings and determine the geographic areas impacted, although most likely they will be based on MSA (Metropolitan Statistical Area). And investors still don’t know what to charge for the higher loan balances, which will be based on whether or not the loans can go into mortgage-backed securities. Regardless, yesterday’s vote was a shot of perceived good news for an industry that hasn’t had much to crow about in the last year.

James Lockhart, the Director of the Office of Federal Housing Enterprise Oversight (who oversees FHLMC & FNMA, government-sponsored enterprises) stated “any increase in the conforming loan limit should be coupled with quick enactment of comprehensive GSE reform…the loan limit provision…would increase the Enterprises risks by allowing them to enter the ‘jumbo’ loan market. It would increase the maximum size loan those GSEs could purchase or guarantee from $417,000, to the lower of 125 percent of median area prices or $730,000, for mortgages originated between July 1, 2007 and December 31, 2008. This change should help lower interest rates on some jumbo mortgages, but other potential implications deserve attention. Jumbo loans would present new risks to the already challenged GSEs. The prepayment and credit risks are different than those of conforming loans. The provision also pushes the GSEs to increase their geographic concentration in some of the riskiest real estate markets. Roughly half of all jumbos are in California.”

The $146 billion economic stimulus package approved by the House contains an important provision for homeowners: a one-year increase to $625,000 nationwide and up to $729,000 in high-cost areas such as the San Francisco area in the conforming loan limit for loans that government-sponsored enterprises Fannie Mae and Freddie Mac can purchase. The current limit is $417,000. The house bill seems to indicate that conventional loans will use the same MSAs as FHA loans do and thus have different limits for each MSA. Here is what seems to be floating out there: “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 (FHA section) of this title,” which suggests that both FHA and conventional loan limits will be 125% of median area home price as set by HUD. Moving quickly to get the economic package to President George W. Bush, the House of Representatives passed the bill by 380-34, just hours after the Senate cleared the measure on a vote of 81-16. Bush is expected to sign the bill next week.

Well, yesterday was practically one for the record books, with two-day volatility not seen since the late 1980’s. In spite of yesterday’s move, the market is pricing in further cuts at the meeting Tuesday & Wednesday. Rates have dropped since the beginning of 2008, and looked absolutely fantastic Tuesday and first thing yesterday morning. But then the tide turned, impacting those who waited to lock for whatever reason. The stock market underwent a 600 point swing, mortgage securities worsened in price between 1 and 2 points, depending on the coupon. Franklin American sent out 6 different rate sheets, Taylor Bean sent out 4. Chase worsened their rates by .375%. The speed of changes were lightning fast, and lenders across the nation underwent numerous changes, with some investors basically pricing themselves out of the market in mortgages regardless of the actual mortgage-backed securities market. This morning after a basically unchanged Jobless Claims number the 10-yr stands at 3.57% and mortgage prices have stabilized.

Reprinted with permission from Robert Chrisman Jr.- Director of Capitol Markets with NL Inc Mortgage Companies

PUTTING A FREEZE ON IDENTITY THEFT

In the time it takes to count to ten, five new people will become victims of identity theft. In fact, according to the U.S. Department of Justice Statistics, identity theft is now passing drug trafficking as the number one crime in the nation--with more than 15 million victims every year.

Rather than lay awake at night worrying and wondering if your identity has been stolen, you can actually take a simple step to protect yourself... it's called a credit freeze (or, sometimes, a security freeze). Essentially, a credit freeze gives you the ability to "freeze" or lock access to your credit file--which helps prevent someone from opening a new account in your name.

Here's How It Works

When someone tries to open an account in your name, they'll be stopped in their tracks. That's because one of the first things a creditor will do before opening the account is pull a credit report.

By having a credit freeze in place, creditors aren't able to pull your credit report. And, since very few lenders will issue credit without first seeing a credit report, identity thieves can't open fraudulent accounts using your name. However, when you want to apply for credit, you can temporarily lift the freeze using a PIN... thus, allowing your legitimate application to be processed.

The Flip Side

First, it's important to remember that a credit freeze only stops someone from opening a fraudulent account. It can't stop them from using a stolen credit card. So you still need to keep the phone numbers of your credit cards handy, in case your cards are lost or stolen.

In addition, some critics argue that credit freezes have more of a downside than most people realize. That's because you won't be able to purchase a car, get a new credit card, or refinance a mortgage at a moment's notice. Instead, you'll have to plan ahead by lifting the freeze, which usually takes about three days.

For most major purchases, this won't be much of an issue--after all, how many of us buy a car or house on a whim? Typically, we make the decision to start looking and, at that point, can easily lift the credit freeze in anticipation of the purchase. However, a credit freeze can be problematic if you're at a department store and the cashier offers you 10% off your purchases if you open an instant credit card with the store.

Other Options

Opponents of credit freezes also argue that consumers can just as easily fight identity theft with fraud alerts, which require lenders to verify identity before issuing loans or credit. If you have reason to believe you've been a victim of identity theft, you can obtain a 90-day fraud alert. And if you provide reliable evidence that you are in fact a victim--using such documents as a police report--you can extend that fraud alert for up to seven years.

The problem is... fraud alerts only come into play AFTER you've been victimized. So for many consumers, credit freezes offer more protection and more peace of mind.

Here's the Shocker... You May Not Have a Choice!

Believe it or not, credit freezes aren't available in every state. Some states have yet to pass credit freeze laws. Why? Well... it all comes down to a battle between the big business of instant credit and the growing need for more secure personal information.

And, don't kid yourself, billions of dollars are at stake in this battle! Credit-reporting agencies sell credit reports to lenders, landlords, employers and other businesses. Department stores and retailers generate huge revenues by offering instant store credit cards that boost profits through interest and increased shopping. And, finally, we as consumers have simply grown accustom to receiving on-the-spot credit for our purchases.

To learn more about these issues and to find out if your state allows credit freezes, visit www.ConsumersUnion.org/finance/creditfreezeinfo.htm.