The big news today has been the collapse of the 5th largest investment bank, Bear Stearns. Their stock plummeted last week and into this morning trading. To avoid bankruptcy, JP Morgan Chase and the Federal Reserve bailed them out…When they structured the deal over the last two days they were worth an estimated $236 Million, Friday they were estimated to be worth $3.5 Billion. So you can see the gigantic swing…Ouch!

In other news, today has actually been a good open for the mortgage market. I strongly believe that we will start to have more activity in the DC Metro area marketplace. The news in the Capital Markets on the other hand is not good; but new FHA (Federal Housing Administration) limits increasing is phenomenal news!

The conventional conforming limit has also changed with the stimulus package to $729,750 in our general MD/DC/VA area. The target pricing date of the new Fannie Mae / Freddie Mac limits are estimated to go into effect by April 1st, 2008 ~ No it’s not an April Fools joke! Now don’t get me wrong- I think this is going to create more options to take advantage of the new “Jumbo Conforming” for folks that have a large down payment and good credit…the rate is more than a full 1% better, however, there are many more restrictions on this program vs. the new FHA loan product.

For example, the minimum credit score you need for Jumbo Conforming is a 660 / If you finance more than 80% on one loan you need a 700 score. The down payment required is going to be at a minimum 15%. The reason it’s not that great is due to the “declining market” area restriction (which is basically everywhere except for some parts of MD and some parts of DC, call to inquire), So you have to reduce the Maximum allowable LTV / CLTV (Loan to Value / Combined Loan to Value) by 5%. If you are an investor trying to take advantage / or buying a second home you better think twice-the required down payment is going to be 40 - 45% into the deal! Again, “Ouch!”

In a nutshell, it’s going to be great with someone that has 20% down, good credit and buying a primary home. If this is you, you’re in great shape!

***Now the FHA loans BY FAR are going to have a greater impact for buyers in Northern Virginia and Washington DC. FHA loans will assist buyers who don’t have a lot of cash to put into the deal. It’s going to bring in a large pool of people in the coming months! You don’t have to be a first time home buyer either.

Some attractive highlights with the new FHA mortgage are as follows:

* Lower credit scores typically allowed
* There is NO “declining” market policy that they follow
* Down payment is lower than a normal conventional type loan ~ FHA only requires 3% into the transaction…
* Gift Funds are allowed, even for entire down payments!
* You can have a parent on the loan as a “non occupying” co-borrower (they don’t live in the property) to pool assets together to help with debt ratios and the overall picture
* 6% seller subsidy (seller concessions) is allowed.
* ARMs and Fixed products available

Another point to mention is that there still exists the “Nehemiah” product (I can do this type of loan and have done many in the past). Basically this is a product that assists the buyer with the 3% down payment. It comes from the seller as a seller credit. There was a motion to strike this down; however, this was unsuccessful and therefore is still available and active. So don’t think that if you don’t have the 3% down that you’re out of luck…It is St. Patty’s Day remember…get it from the seller.

Any questions? Call your lender of choice- me!

Dave Anzueto | Vice President | 703-883-9587 | Apply online www.davidloans.com

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