When Will We See $729,500 "Conforming" Loan Limits?

So, I have been quiet on the new economic stimulus plan that Obama signed last week and how it affects San Francisco real estate because I’ve been swamped! 
In fact, most nights last week, I worked until 3am and 4am.  Last night, I managed to turn off my computer at midnight leaving anything that wasn’t urgent to be dealt with today. 
So that being said, I do plan to give you my 10 cents on the package.  No, I don’t mean 2 cents.  I mean 10 because I have a lot of thoughts.  So stay tuned for that.  And I promise I’ll try to keep them rather condensed.
In the meantime, I wanted to touch base with a mortgage broker I work with (and highly recommend), Marc Geshekter about last year’s conforming loan limits being reinstated.
I asked Marc:
I know the $729,500 loan limits will be reinstated, but WHEN can San Francisco home buyers take advantage of them???
Marc’s answer, as usual, in depth and honest.
Here’s what he had to say:
This was passed, but we have no idea when it will be put in place and what the pricing will be.  Based on how long it took for this to be activated with lenders last year I’m guessing at least another 4-6 weeks before it will be offered across the board for consumers.  We might see some lenders begin to trickle out with pricing sooner, but who knows if it will be competitive or not since there will be nothing to compare it against.  My initial thought is that Countrywide wholesale will roll this out first, they’re somewhat quick on the draw with implementing new to market changes.
I believe we may see three buckets:

  1. Conforming:  $417k and below
  2. High Balance Conforming:  $417,001 – $625,500
  3. Jumbo Conforming:  $625,501 – $729,750

The High Balance Conforming might go away for the high cost area’s and Jumbo Conforming may replace it making Jumbo Conforming loans $417,001 – $729,750.  I’m not positive on this though and I’ll keep you posted.
Also, FHA will be back up to $729,750 for SF County, but as we all know FHA is not a big program for the city. 
The big piece that would REALLY help us out is if California was considered a high cost state along with U.S. Virgin Islands, Hawaii, Alaska, etc.  This would allow us to raise our Fannie and Freddie loan limit to 150% of the limit.  It would make the Jumbo Conforming loan limit for certain area’s of California (SF county for sure) $938,520.  Someone could then get a (almost) $1MM loan and use a Fannie or Freddie lender v.s. having to go through a jumbo loan lender.  We’ve been talking about this for years, but I’m still not confident this would happen any time soon.
Hope that helps. 

Luba

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