Mortgage Blog

Congressional leaders and the White House reached agreement this past week on a proposal to increase conforming loan limits. The proposed would temporarily change the conforming loan limit for Fannie Mae and Freddie Mac; raising it from $417,000 to $725,000. The proposed package includes an increase in the Federal Housing Administration's loan limits (FHA) from $362,000 to $625,000.

The proposal would also enable the FHA to become more active in dealing with the direct impact of the housing crisis, permitting more borrowers facing defaults to refinance subprime loans through the federal agency.

One factor remains – congress must sign the bill. Congress will try to get the bill passed before the Presidents' Day recess next month.

Moving ahead Wednesday with an aggressive strategy for warding off a feared recession, the Federal Reserve’s Open Market Committee cut interest rates again.

The central bank cut its federal funds rate, the interest that banks charge each other, by a half point to 3%, marking the fifth time rates have been cut since September. This impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans,

Also Wednesday, the Fed approved a 50-basis-point cut in the discount rate, the overnight rate at which the Fed loans money to banks, to 3.5%.

Last week’s surprise three-quarter-point cut which drove the funds rate down to 3.5% and was the biggest reduction in this rate in more than two decades. This emergency cut because it came between regular meetings.

The Fed added, will continue to pursue its aggressive strategy “because they want to err on the side of protecting this economy.” Inflation can be dealt with later, he said, predicting that rates could go back up toward the end of 2008 or early in 2009.

The Federal Reserve slashed two key interest rates by three-quarters of a percentage point this morning following an unscheduled meeting. They have continued concerns about a weakening economy and turmoil in the financial markets.

The Fed lowered its federal funds rate, which impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans, to 3.5 percent from 4.25 percent.

The Fed also lowered its discount rate, which is what it costs banks to borrow directly from the central bank, by three-quarters of a point, to 4 percent.

The Fed has also loaned $70 billion to banks through a series of three auctions since December to help mitigate the effects of the credit crunch on Wall Street. That appears to be working as the Fed said Tuesday that "strains in short-term funding markets have eased somewhat."

President Bush and Congress are also working on an economic stimulus package to help beleaguered consumers. The plan is widely expected to include payments to consumers, and tax breaks to spur investments by businesses.

If I asked you, you could easily name three people whose leadership qualities inspire you. If I asked you why, you’d tell me about the things these inspiring people did or are doing. Leadership is defined through action. Therefore, in developing your own leadership skills, you have to act in ways that are fitting to your leadership vision and your self – all the time. We can all name many actions of other people whom we admire, but what inspires us is the integrity that gives these actions meaning.

Becoming a leader isn’t easy because it takes a conscious commitment and consistent effort to develop one’s leadership skills. But on the positive side, anyone who is willing to make the effort can become a good leader.

And as good leadership is critical to business success, your efforts to improve your leadership skills will be amply rewarded. By working on the skills of leadership, you can become the leader your small business needs.

Seller’s will take a bigger hit on their credit report by going through foreclosure or giving the lender a deed-in-lieu of foreclosure. FICO score changes are as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. Sellers will take a hit of 250 to 280 points. This means if a seller's FICO score before foreclosure was 680, it could dip as low as 400.
• Short Sale
  The affect of a short sale on a seller's credit report is much less damaging. The ding on credit will show up as a pre-foreclosure in redemption status, which will result in a loss of 80 to 100 points. This means a short sale with a previous FICO of 680 will see it fall to 580 to 600.

Waiting Period Before Buying Another Home

• Foreclosure or Deed-in-Lieu of Foreclosure
  A seller who wants to buy another home after foreclosure will end up waiting about 36 months before a lender will offer any kind of interest rate that makes sense.
• Short Sale
  The good news for short sale sellers is the wait is much shorter before buying another home. You can buy again in about 18 months at a good interest rate

This information is based upon current guidelines and are subject to change.