When will new confirming loans be actionable for ReFi's, my bank won't allow this yet for some reason (loan, fixed rate)

[mc1]

I've been checking with my bank, HSBC, on when they will offer the new raised levels for conforming loans (which are now at max in NE NJ where I live). I get stonewalled, with little to no answer. They keep saying check back, so I guess I need to call every week or two. They also said expect the rates to rocket when it is released and another whopper, that it might require a point on the new loan.

I sold a condo last year in May and bought my home right around the same time, so I traded up and got lucky in the timing. I did very well on the condo and bought a house because I've a 2 year old son and we wanted more space and a nice neighborhood for him to grow up in. The house is certainly alot more expensive than what we had before and I'm not worried that we may have overpaid (by today's standards), especially since we did well on the condo. I'm sure the value of the house has dropped a bit (we live in Madison, NJ, so it's holding fairly well as it's still pretty close to NYC), but we are going to live in this house for the next 30 years or the rest of our lives, so I'm overall not concerned with the value of the property right now (and we love it) as it's not about us selling it, it's where we are living.

Still, we got a Jumbo, and it would be great to get the conforming rate which is at least a half point lower. We did what most first time home buyers are told to do, to buy just slightly outside our comfort level as we'll grow into the home so we wouldn't want to go bigger in 5 years (as we actually did with the condo, we outgrew it after only a year or so). We can handle it the payments, sure, but with the rising prices of just about everything of late, the lower rate would be a major help.

SO....can anyone help with any suggestions or advice on what the deal is? Why aren't the banks opening this up and what's with the point applied? It doesn't make sense to me, that if we got a standard loan that we'd get that penalty. Are ANY banks offering this yet? I understand that the new limits are for a limited time and I'd really like to not miss the boat with either it expiring, or for rates to zoom up where it doesn't make sense (my Jumbo is actually not bad at all, it's 6.25, but 5.75 or thereabouts is quite a bit more attractive).

I'm most concerned about the fact that the upper limit, which is at max in my area (NE NJ), is not being accepted by the bank for us to refi. They acknowledge the change, but they say that HSBC itself isn't offering the refi oppty yet. This doesn't make sense to me. If the ceiling was raised, what is slowing down the process to allow for me to refi? I can't get a straight answer to understand why I'm not able to intiiate the refi yet based on standard loan rates.

Thanks!

[Daddys///M3]

The new conforming limits are in effect around the country. That being said there is a pretty substantial price hit to "conforming jumbo" loans, and I can't see you getting lower than 6.25%. There are also quite a few guidelines that make the "conforming jumbo" a bit difficult to qualify for.

[christeen]

How can we find out which lenders offer the new "conforming jumbos?" We're interested in them for first-time home purchase, not refi, but similarly wondering who has them available and when. Do we just have to call all the lenders around town? Thanks.

[mc1]

Then why is HSBC saying that they don't offer it 'yet'? I know it was enacted by Freddie Mac/Fannie Mae, but they banks aren't making them actionable, certainly not MY bank. Why would that be and how can I determine which lenders are?

Also, if the standard loan rate is 5.75%, then with the NEW cielings, I would qualify for a standard loan at that level, or whatever the rates are in any given day. It's not in affect a jumbo, which is what I had to get, because we exceeded the previous cieling, before it was raised. That's how I read it, how it's been explained to me, how it's been explained in the media, but I'd certainly be happy to hear a more detailed explanation if I'm somehow missing something.

Thanks!

[TwiloMike]

Originally Posted by mc1

Then why is HSBC saying that they don't offer it 'yet'? I know it was enacted by Freddie Mac/Fannie Mae, but they banks aren't making them actionable, certainly not MY bank. Why would that be and how can I determine which lenders are?

They may not want to offer that product. My bank does. Other banks do too. HSBC doesn't have to offer it if they don't want to.

Also, if the standard loan rate is 5.75%, then with the NEW cielings, I would qualify for a standard loan at that level, or whatever the rates are in any given day.

Not so fast. It's still a larger than conforming loan: it's Jumbo Conforming, and it carries rate penalties for being what it is. It is likely to be in the low 6s at the moment given that you qualify for it to begin with: it's a more strict qualification requirement than for a conforming loan.

It's not in affect a jumbo, which is what I had to get, because we exceeded the previous cieling, before it was raised.

It's now in middle position, wedged between conforming and jumbo, and priced accordingly: about .5% above conforming but greatly better than jumbo.

That's how I read it, how it's been explained to me, how it's been explained in the media, but I'd certainly be happy to hear a more detailed explanation if I'm somehow missing something.

Thanks!

Feel free to ask questions. I'll gladly answer based on how my bank is doing Jumbo Conforming loans.

[Daddys///M3]

Originally Posted by christeen

How can we find out which lenders offer the new "conforming jumbos?" We're interested in them for first-time home purchase, not refi, but similarly wondering who has them available and when. Do we just have to call all the lenders around town? Thanks.

Your best bet is to contact a broker or hit the phones. Shop a couple of brokers and a couple of banks to be sure that you are getting the best deal.

Originally Posted by mc1

Then why is HSBC saying that they don't offer it 'yet'? I know it was enacted by Freddie Mac/Fannie Mae, but they banks aren't making them actionable, certainly not MY bank. Why would that be and how can I determine which lenders are?

Also, if the standard loan rate is 5.75%, then with the NEW cielings, I would qualify for a standard loan at that level, or whatever the rates are in any given day. It's not in affect a jumbo, which is what I had to get, because we exceeded the previous cieling, before it was raised. That's how I read it, how it's been explained to me, how it's been explained in the media, but I'd certainly be happy to hear a more detailed explanation if I'm somehow missing something.

Thanks!

Perhaps HSBC is just not offering it. As far as how to find out who is offering these, see the above advice.

However, as I previously stated their is a bit of a pricing hit for this conforming jumbo, just like their would be for reduced documentation or a higher loan to value. It is a riskier loan, therefore it is priced accordingly. The lowest I could find was 6.375%. There is also the fact that these loans have extremely stringent guidelines, so depending on your scenario you might not even qualify for it. If you are currently in an adjustable it might be worth taking a look at to get yourself into a decently priced fixed rate. If not I wouldn't worry too much. You have a pretty good interest rate, better than some of the conventional conforming stuff I've seen close recently (high loan to value programs, etc.).

[mc1]

I guess I need to do a little more homework. I have a fixed 30 yr, and I know the rate is pretty good, but it's a jumbo. My understanding was that with the cielings raised on the standard loans, I could refi to get that rate, which is around 5.75-5.85 last I checked. I know that jumbo's are much higher than what I've got now, but I didn't realize there was a middle version. Nothing I've read or heard mentioned that.

I thought that with the new cielings, the value of properties that would be covered with the standard loans was what was raised, meaning that higher value properties can get the regular rate. Jumbos, again to my understanding, are not covered by Freddie/Fannie and therefore have higher risk and the ensuing higher rate. My mortgage is $520k on a (value'd as of middle of the year '07, so likley lower now) $650k property. Given that it's under one year since we bought, we default to the last assessed value, even if the real value has dipped. We've put in a number of improvements, so that's likely to offset some (new windows, completely redone finished basement, one major new appliance) but I still have no illiusions that the value is down given where the market is.

So, with the above scenario, I had understood that I could get the standard rate because my value is still considerably lower than what the cieling was raised to (maxed at over $700k in my area, already checked). Under these rules, if I had bought, say yesterday, woudln't I get the standard rate, not a jumbo? IF so, why can't I refi to the standard?

If I'm getting this 100% wrong though, can someone explain this to me in detail. I very much appreciate all the help!!

[KCfromNC]

Originally Posted by mc1

So, with the above scenario, I had understood that I could get the standard rate because my value is still considerably lower than what the cieling was raised to (maxed at over $700k in my area, already checked). Under these rules, if I had bought, say yesterday, woudln't I get the standard rate, not a jumbo? IF so, why can't I refi to the standard?

Because it's not a "standard" mortgage, it's a conforming jumbo mortgage. The rules Fannie and Freddie have set forth for them are different than conventional loans. Basically, they were forced to take on these riskier loans, so they're passing along the costs associated with those risks to the people benefiting from them - the borrower. There are higher rates and stricter documentation requirements than you might be prepared for.

Do a google search on conforming jumbo loan guidelines to see what they are. I think even with your optimistic appraisal you're going to be pushing the LTV limits if you try a refi, but as others have pointed out, your current rate is better than the current best case for a conforming jumbo so there's no point in spending too much time on it.

Here's a good link Calculated Risk: Jumbo Conforming Loan Guidelines. Freddie has different guidelines, but the take-home message is the same - these are more expensive and harder to qualify for compared to conforming non-jumbo loans.

[christeen]

Originally Posted by Daddys///M3

Your best bet is to contact a broker or hit the phones. Shop a couple of brokers and a couple of banks to be sure that you are getting the best deal.

Thanks, looks like I'll have to start getting mortgage broker references.


mc1: KCfromNC already explained, but to simplify from one layperson to another -- There are essentially 3 different brackets of loans from what I understand:

(1) Conforming Loan -- those loans that were lower than the old Jumbo max of $417k. These are still called "conforming loans."

(2) "Jumbo Conforming" Loan -- this is a new category of loans that are higher than old $417k Conforming Loan limits, but less than the new Jumbo limits (you said it's ~$700k in your area). These can now be sold to Fannie/Freddie but have stricter requirements (credit score, LTV, etc) and higher interest rates than the old Conforming Loan above. Not all lenders are offering these yet.

(3) Jumbo Loan -- loans higher than the new limit of up to $729,750 depending on your area (you said ~$700k in your area). These can't be sold to Fannie/Freddie.

Sounds like your loan is above $417k, the "conforming" loan, but less than the ~$700k new Jumbo limit for your area. That would make it a "Jumbo Conforming" loan, which not all lenders are offering yet and not all borrowers will qualify for. Hope I didn't just add to the confusion.

[mc1]

Thanks for the details, that helps alot.

I've spoken to a few mortgage brokers and though I've got great credit, the main thing preventing me from getting a Jumbo Comforming is A) I've got a pretty good rate and those loans won't better it. Infact, they'll be worse. B) They are looking at 25% or more equity in the property, and my 20% amazingly won't cut it. Requirements are much much strickter than with other loands.

I think not only will there be a small window for people to act on these, but there's a very very small pool of people who will qualify. Basically you will need to have had some increases in value of the property via major add-ons, or live in an area where the values have risen (rare!) or have had the property for a time such that you've payed down some of the mortgage, or had put up initially 25% or more down.

I would like to say that I'm a lender's dream, with excellent history and rating and the only reall debt I have it my mortgage. I don't qualify even so.

Thanks again all for all the input!!