REAL ESTATE NEWS 

The Housing and Economic Recovery Act of 2008 is Signed into Law

Recently, the House and Senate passed broad-based housing legislation, which was signed into law by President Bush this morning. Heralded as the most sweeping housing reform since the “New Deal”, it includes the creation of a strong regulator for Fannie Mae and Freddie Mac, changes in conforming and FHA loan limits, a comprehensive modernization plan for FHA, and the Hope for Homeowners plan, which may help distressed homeowners by refinancing them into FHA loans.

Wells Fargo has long advocated stronger oversight of Fannie Mae and Freddie Mac, as well as modernization of FHA, and views these reforms as necessary to helping return stability to the mortgage markets.

Given the tremendous impact this legislation will have on the industry, several cross-functional teams, including Product Development and Loan Servicing, are analyzing the detailed components of the new law, and working with the various agencies to ensure crisp, accurate implementation.

Once those agencies have defined certain changes required of them, we will be positioned to make decisions about our plan, and how quickly we can implement. Our goal is to roll the changes out as quickly as possible, recognizing that some may take more time to put into place. Therefore, the changes will not be immediately available to our borrowers or clients.

Further communications regarding implementation, timelines and specific changes will be delivered from the lines of business as details become available.  Until that time, team members should continue to follow existing policies and processes.

·         Effective Jan. 1, 2009, higher permanent loan limits for conventional conforming and FHA; limits to increase to a maximum amount or ceiling of $625,500, depending on the formula for each metropolitan area.  Note: The temporary limits established in March will expire on Dec. 31, 2008.

·         FHA floor limits will remain the same at $271,050.

·         The VA guaranty will increase.

·         Minimum cash investment for FHA loans will increase to 3.5%.

·         A moratorium on risk-based pricing for FHA loans, effective Oct. 1, 2008, as indicated in the Act.

·         Elimination of Seller-funded Down Payment Assistance Programs with FHA loans, effective Oct. 1, 2008, as indicated in the Act.

·         Condo processing for FHA loans will be streamlined (timeline TBD).

·         FHA reverse mortgages (HECM): changes, among others, include higher loan limits, availability with purchase transactions and a modification to the origination fee.

Note: a similar story was posted on HomeScene and the HCFG homepage late yesterday. Watch for more details on how these changes will be implemented.