I hope you had a safe and happy Holiday Season!

Last month I talked about the new Fannie Mae loan limits of $625,500 and that in some areas, the limit is as low as $417,000. I also talked about the importance of ensuring that your property is in a Trust and confirming that it actually is! Additionally, I talked about the Fed's decision to buy $600 Billion of mortgage backed securities.

The good news is that the Fed announced today that it is moving forward with this plan (and it looks like the actual number is $500B). Why is this good news? Because it will keep interest rates low (remember, mortgage rates are based on mortgage backed securities and when they are selling, that is good for interest rates) and it looks like they will remain low for about 6 months or more.

Here's the bad news... Freddie Mac has announced their new policy effective in May, that prevents a lender from communicating with the appraiser on refinance transactions. Why is this bad? Because the cost of appraisals will likely increase and you as the consumer will not be given an idea of property value (by the actual appraiser) prior to the appraisal being completed. The real kicker is that the big lenders will use Appraisal Management Companies (the middle man between lender and actual appraiser) whose job it will be is to reduce risk for the lenders (sounds like a good thing) and thus provide conservative appraised values (if they want to keep their jobs with the lender/Appraisal Management Company). I believe this will result in additional downward pressure on property values and ultimately hurt the consumer trying to take advantage of today's great interest rates. I expect Fannie Mae and other lenders to follow suit shortly.

The solution? Take action now. Get in the queue... lenders are swamped with business and as a result, refinance transactions are now taking a month or more to complete in many cases - and I expect the volume to increase.

For in-depth information on the appraisal issue, click here.

For more information on the Fed's Press Release, click here.

That's it for now... feel free to contact me anytime!

Sincerely,

Charlie Christensen
888-711-5454 Toll Free / 415-454-1130 Local ext. 111

charlie@cwcfinancial.com