From the “Stuff that is sort of old news but we should mention anyway in case someone happens to wander into our blog on this fine Sunday” files, we bring you two real estate tidbits that could impact our housing market.
First is the looming reduction in FHA loan limits for high-priced areas. Shanne Sleder of The Mortgage Planners summed it up well, saving me the need to construct my own sentences at 7:00 AM:
HUD (Department of Housing and Urban Development) recently announced that the FHA (Federal Housing Administration) will be lowering their loan limits for their high balance loan program. This program is typically for high priced counties and higher priced homes. San Diego County currently has a loan limit of $697,500. Starting October 1st, 2011 the San Diego County FHA loan limit will be reduced to $546,250. Many lenders will stop accepting loans up to the old limit after September 1st, 2011.
Next up is the passage of Senate Bill 458 which relates to short sales in California.
From the California Association of Realtors (CAR):
Governor Brown signed into law today (“today” being Friday) a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
According to the San Diego Realty Estate Examiner:
A short sale transaction may take several months to complete because of the inability of lenders to make timely decisions… local real estate agents are now concerned that the lenders may take even longer deciding the merits of a short sale.
Even longer than what? Given that I currently have a buyer client who has been waiting 14 months for a short sale approval (and is still waiting), I’m not sure I am going to stay up nights fretting about potential longer processing times. It’s kind of like an Arizona summer – dry heat or not, 118 degrees is just hot. And waiting for a bank to deliver a verdict on a short sale application, being that they are banks and all, is an often long, uncomfortable process however you measure it.