Fannie Mae announced an expansion to its jumbo-conforming program. The move follows the easing of loan-to-values on properties in declining markets.
The secondary lender will now allow fixed-rate jumbo loans with 10-year interest-only periods on all property types, according to a seller announcement Friday. In addition, jumbo programs include hybrid LIBOR adjustable-rate mortgages and interest-only hybrids.
On owner-occupied properties, refinances up to 75 percent LTV are allowed with up to $100,000 cashout, while ARM LTVs can go up to 90 percent, Fannie said. Limited cashout refinances allow up to 90 percent LTV and combined LTV.
The expanded jumbo guidelines apply to mortgages purchased on a whole-loan basis on either July 1 or Aug. 1, depending on the type of loan.
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.
Qualifying loans must have been originated on or after March 1, though Fannie will consider loans originated on or after July 1, 2007, if the mortgage is acquired through a bulk purchases. Underwriting on jumbo-conforming loans needs to be done manually.
Fannie explained that jumbo-conforming loans originated on or after March 1 are no longer subject to LTV reductions if the property is located in a declining market. An elimination of the LTV reduction for all non-jumbo single-family loans approved through the Desktop Underwriter system was also announced Friday.
The Washington, D.C.-based company clarified that fully amortizing jumbo ARMs may now be qualified at the note rate and CPM Expedited Review or the Lender Full Review process is not required for attached units in a PUD project.
Conforming Jumbos Retroactive
Jumbo mortgages originated last year may be eligible for purchase as conforming loans as early as next month.
|FHA, Conforming Limits Boosted
President Bush has signed into law emergency legislation that will temporarily increase the conforming limit by 75 percent. In addition, the limit for loans insured by the Federal Housing Administration will also see a temporary boost.