? of the Day: Could you tell me when the increase in conforming loan limits will go into effect?

I was emailed this question today:

Could you tell me when the increase in conforming loan limits will go into effect?

Believe it or not, the temporary increase in conforming loan limits is in effect.  In fact, it’s retro-active to July 2007.  Why?  This is so that Fannie and Freddie can provide some relief to Wall Street by being able to purchase loans over the true conforming limit of $417,000.   Investors have lost their appetite for jumbo mortgages, regardless of how great the borrower is, these loans did not have Fannie or Freddie’s backing.  Now that they will, we should hopefully see some relief as far as lower rates from lenders for jumbo mortgages.   The higher rates we have been seeing lately with non-conforming (jumbo) mortgages was to try to sweeten the pot on Wall Street. 

Lenders are being slow coming out with their pricing.   The first one I wrote about came out swinging with some very high "hits" to price.  I’m now beginning to see others just starting to appear with better pricing.  As more lenders enter the conforming-jumbo and fha-jumbo markets (i.e. competition), we may see rates improve.

Stay tuned!  I’ll be posting rates tomorrow.