Did You Buy Too Much Home?Help is on the way....The government on Wednesday raised the mortgage limits for loans guaranteed by the Federal Housing Administration in 14 high-cost California counties. The limits, with the maximum at $729,750, are derived from median home prices in each county.
The counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Venturato. The higher caps will let more homeowners with high-rate subprime mortgages refinance into federally insured loans.
The Big Winners in California by County
Appraisers: Part of the Problem
More Changes, the new agreed upon code will also bar lenders from using mortgage company appraisers and it also bars lenders from pressuring appraisers to make inflated estimates. Fannie and Freddie also agreed to create an independent organization to monitor the new appraisal standards.Some estimate that home values are overvalued nationwide by at least 10% because of inflated appraisals.
Its Really up to the BanksAll these changes are helpful and part of the puzzle but they are not nearly big enough to ease the pain.
The kink in the plan is that many of the people in trouble will not qualify for a refi because of low credit or low incomes. When banks get burned they pull back by raising loan standards. We still believe that the only way for the crises to be eased and for people to stay in their homes (and off the market) is for the banks to re-negotiate and not foreclose. The median foreclosure price for homes on the market in San Francisco is 20% less than the median price of a similar home listed by a real estate agent. This is hurting everyone and the cost to the economy is huge...needs to be mitigated.
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