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Conforming Jumbos Retroactive

Bulk purchases available on loans originated in July 2007

March 7, 2008

By MortgageDaily.com staff

Jumbo mortgages originated last year may be eligible for purchase as conforming loans as early as next month.

Fannie Mae issued an announcement that it will purchase fixed-rate mortgages under temporarily higher limits beginning in April. Adjustable-rate mortgages can be purchased at the higher limit beginning May 1.

The conforming limit was raised to $729,750 as a result of the recently enacted H.R. 5140, the Economic Stimulus Act of 2008. The temporary increase is effective until Dec. 31, 2008.

In a message to MortgageDaily.com, Fannie's regulator, the Office of Federal Housing Enterprise Oversight, said the higher limit applies to loans originated as far back as July 1, 2007. While Fannie said loans must have been originated on or after March 1, 2008, it noted it will consider loans originated as of the earlier date in bulk purchases.

The Washington, D.C.-based secondary lender explained jumbo-conforming loans must be secured by 1-unit properties. Loans need to be manually underwritten, though the company plans to subsequently add the temporary limits to its Desktop Underwriter. The maximum loan-to-value is 90 percent on fixed-rate purchase loans, 80 percent on ARM purchase loans and 75 percent on refinances. Cashout transactions are excluded. The maximum LTV on second homes and investments properties is 60 percent.

On all transaction types, the minimum credit score is 660 with no 30-day mortgage lates, Fannie said. In addition to fully-amortizing products, the higher limits can be applied to 5/1 ARMs and 30/10 interest-only loans. Minimum seasoning is six months on refinance deals.

The maximum debt ratio is 45 percent, according to the announcement. A loan-level price adjustment of 0.25 percent is required for fixed rate mortgages and 0.75 percent for ARMs.

The $729,750 limit applies to just some high-cost areas, though many other areas still saw limits raised to a lesser degree.

OFHEO has posted maximums by MSA/county at:

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