Links and Minifeatures 09 28 Friday

A coffee break for Sisyphus! Even if I don't drink coffee and that's making way too big a deal out of it, the internal links should now be all fixed. What this means is that for those folks who find the article they were looking for, they can now find the linked and related articles as well.

So if any internal link of Searchlight Crusade comes up with a 404 error (page not found - and I have a customized 404 page that says it's a 404 page), please email me to tell me I missed one.

I'm going to be fixing the external links (via a 404 redirect function) as soon as I can.

I know I only put out three new articles this week. Trying to Rehabilitate the Negative Amortization Loan - NOT! really did take a lot of work, basically every spare minute for two days, mostly reminding myself of what all that math really meant, and then I ended up not using most of it. Fixing the internal links was also a pretty significant project. Still, I'll try to do better next week.

UPDATE: Almost forgot, but I believe that I have also fixed TypeKey registration, so you should be able to log in and comment via TypeKey. Let me know if that's not the case!

Conforming Loan Limit Guessing Game!

I got an emailed question about the raising conforming loan limits. We're coming up on that time of year, as they usually announce the decision within two weeks plus or minus of the beginning of November, to be effective January 1st. Last year, there was no significant upwards pressure on the limit, as they'd just raised it all the way from $359,650 the year before to $417,000, a nearly 16 percent rise, so it was left alone. I expect that to be very different this year.

For full documentation conforming loans, the fact remains that we can do basically anything we used to be able to. The rates have even improved a little. However, for stated income or non-conforming loans, this has changed, and the loan prices have gone very high, proportionately. When the willingness of lenders to touch non-conforming financing plummets, well, that increases the demand for conforming financing, and translates to pressure to raise the conforming limits, as Fannie or Freddie standing behind it means the lender isn't stuck with the loan, and doesn't have to deal with the rest of the secondary market.

Furthermore, due to the need to substitute PMI for a second mortgage loan in the current market (as I discussed here), the conforming loan limit has become a lot more relevant to the average person than it was even a few months ago. When you can use a conforming loan coupled with a piggyback second to purchase a property with a value of up to about $522,000 without any down payment, well, that's more house than the average person can afford. When that option goes away, as second lienholders don't want to go above 90% CLTV lest they lose every dollar, now we're talking about the conforming loan limit (currently $417,000) suddenly becoming a lot more constricting in practice.

Finally, with efforts to tie the FHA maximum to the conforming limit while other parties in Congress want it raised above that, this creates even more pressure to raise the conforming limit. This is the sort of back door approach that's very common in legislative circles. "Okay, the president says he'll veto the bill if it goes over the conforming limit, so we'll give him what he wants in the bill, and then get the conforming limit raised."

The upshot of all of this is that I would be surprised if the conforming loan limit doesn't get raised this year. I'm going to enter $460,000 as my guess for single unit residences, as opposed to $417,000 currently. Depending upon the strength of behind the scenes pressure, it could well be more. I wouldn't be surprised to see $480,000. I would be surprised to see less that $440,000.