Conforming Loan Limit Chatter, with a decent joke

February 18th, 2008 · No Comments


With the market closed today, and along with it most mortgage companies, what is there to talk about? How about conforming loan limits?

The Secretary of HUD, and OMB, have 30 days from the signing the bill to provide suggested guidelines for loan types, units, etc. to OFHEO. After that, OFHEO will make recommendations to FNMA & FHLMC, who in turn will make recommendations to large investors (Citi, Wells, Countrywide, Chase, etc.) regarding the types of loans, fixed or adjustable, number of units, etc. No one is sure of the exact schedule.

Statistical areas are manipulated by various federal agencies, depending on their wants. For example, the EPA may put a county like Sonoma or Napa into the San Francisco Metropolitan Statistical Area, in spite of Napa & Sonoma Counties being their own “micro” statistical area, whereas the OMB may split them out. A combinations of areas is called a “CSA”, or Combined Statistical Area. The National Housing Act provides formulas for HUD to determine maximum mortgage limits for loans insured by FHA. These limits are determined by the county in which the property is located. You can view all local FHA Mortgage Limits at the following web site: The bill that was signed by the President did not specifically address the areas that will be affected, as mentioned above.  You can keep checking the attached website periodically to find out what the increase will be.

According to an estimate by Goldman Sachs’ chief economist, by the end of 2008 as many as 15 million U.S. households may owe more on their mortgages than their homes are worth. “That may fuel a further increase in foreclosures, erode prices and increase mortgage bond losses,” he said in a Feb. 1 report. I don’t know if Zillow is a respected authority in prices yet, but according to them 39% of people who purchased a home two years ago already owe more than they can sell it for, but (here is the good news part) only 3.2% who bought five years ago are in that situation, the report said.

Here’s the joke:

One day, when a seamstress was sewing while sitting close to a river, her thimble fell into the river. When she cried out, the Lord appeared and asked, “My dear child, why are you crying?” The seamstress replied that her thimble had fallen into the water and that she needed it to help her husband in making a living for their family. The Lord dipped His hand into the water and pulled up a golden thimble set with sapphires. 

“Is this your thimble?” the Lord asked. The seamstress replied, “No.” 

The Lord again dipped into the river. He held out a golden thimble studded with rubies. 

“Is this your thimble?” the Lord asked. Again, the seamstress replied, “No.” 

The Lord reached down again and came up with a leather thimble. 

“Is this your thimble?” the Lord asked. The seamstress replied, “Yes.” The Lord was pleased with the woman’s honesty and gave her all three thimbles to keep, and the seamstress went home happy. 

Some years later, the seamstress was walking with her husband along the riverbank, and her husband fell into the river and disappeared under the water. When she cried out, the Lord again appeared and asked her, “Why are you crying?” “Oh Lord, my husband has fallen into the river!” 

The Lord went down into the water and came up with George Clooney. “Is this your husband?” the Lord asked. 

“Yes,” cried the seamstress. The Lord was furious. “You lied! That is an untruth!” The seamstress replied, “Oh, forgive me, my Lord. It is a misunderstanding. You see, if I had said ‘no’ to George Clooney, you would have come up with Brad Pitt. 

“Then if I said ‘no’ to him, you would have come up with my husband. Had I then said ‘yes,’ you would have given me all three. Lord, I’m not in the best of health and would not be able to take care of all three husbands, so THAT’S why I said ‘yes’ to George Clooney. 

And so the Lord let her keep him. 

Rob Chrisman

Tags: Commentary · GSEs · Government · Mortgage Market

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