Real Estate Finance Alerts

1. FED Rate Cut
2. 2009 Conforming Loan Limits
3. New Mortgage Modifications
4. Commercial Loans
5. Energy Tax Cut

FED Rate Cut – The FED cut rates to 1.00% and futures indicate the FED will keep rates low well into 2009 with another 0.25% rate cut priced in coming meetings. See the FED probabilities charts here.

2009 Conforming Loan Limits – The 2009 Conforming loan limits are now available. The maximum conforming loan amount outside high cost areas is still $417,000. To see the 2009 maximum conforming loan amounts for high cost areas go to the OFHEO web site.

New Mortgage Modifications – Fannie Mae/Freddie Mac and Citigroup

Fannie Mae and Freddie Mac announced a new mortgage modification program. Initial information indicate loans over 90 days late, over 90% loan to value, and still owned by Fannie or Freddie are eligible. The borrower will have to qualify for a new loan at a lower rate or longer amortization period and will not receive any principal reduction. The restrictions make this an option for some homeowners, but it is still not a silver bullet.

Citigroup joined Chase and Bank of America/Countrywide to announce they are working on modifications directly with borrowers who are in default and at risk or going into default.

The real help to the market will come from modification programs from the lenders themselves rather than the government programs. They will be much more inclusive, more effective, and much better for borrowers in the end than anything the government is trying to do. The lack of participation in the government programs shows those are not viable solutions for most delinquent homeowners.

Keep in mind that less than 6.5% of all mortgages are in default and only about half of all homes even have a mortgage.

Commercial Loans – Several major lenders currently offer commercial real estate loans with fees that are a fraction of traditional commercial loan fees and rates that are better than traditional commercial loan rates. More importantly, their loan processes are simple and they still have options for stated income and streamline documentation. You should review your commercial loans to see if a refinance makes sense to lower your rate, re-amortize your loan to lower your payments, or refinance with lower rates prior to your next balloon payment.

Energy Tax Cut – Energy prices continue to plummet and will act as a huge stimulus to the economy. Oil and natural gas are down over 50% from the peaks, which will lower the cost of nearly all products, services, and foods. Most notably, gas to drive your car, gas to heat your home, and gas to generate electricity, will act as its own several hundred billion dollar stimulus. It sure fells good to fill up for less than $100.

Todd Huettner
303-758-7402
todd@toddhuettner.com
www.toddhuettner.com