The figures are in and personal income and consumption are both down, -0.2% and -1.0% respectively. 0.2%??? It feels more like 20% if you ask me. Since spending is falling even faster than income, the savings rate actually rose to 3.6%. I guess the only positive outcome for us Americans is that spending less than we earn is becoming a new trend for this country. Rocket science if you ask me.

In fact, personal consumption is down for the sixth straight month. That’s almost three holes on my belt!

In other news, Conforming loan amounts may be increased back to the 2008 level of $729,750. Do you remember that useless program that was introduced as part of the original economic stimulus package? The problem was that it was priced way too high and almost never made sense. Well, the decision makers have finally figured out that they may have canceled the program prematurely. Maybe they counted up the loans that were funded and realized that they only need two hands…

Ryan Ogata
Senior Mortgage Consultant

From: Rob Chrisman Subject: Feb 2: Quite the January! Some investor updates. And the return of $729,750 loan amounts!?

According to Mortgage Daily, Wells Fargo was the largest residential lender in 2008, originating $230 billion worth of residential mortgages. Chase was second at $185 billion. Bank of America, Countrywide and Citigroup Inc. made up the rest of the top five. Countrywide's figures were just for the first six months of last year since it was bought by Bank of America in July. U.S. originations were down 36% in 2008 compared to 2007 – but most expect a nice volume rebound in 2009.

On the correspondent side of Wells, starting on the 4th they will have new requirements for non-conforming loans. Eligible loans include 30-yr fixed and 5/1 ARM products – 15-yr, 7/1, and 10/1’s become ineligible. Borrowers must have a minimum 720 FICO, and LTV’s will be limited to 75% for 1-2 units, 70% for 3-4 units, and 70% for cash out depending on market classification. In addition, money held in retirement accounts cannot be used to meet post-close liquidity requirements.

Chase increased the hit for loans with FICO’s from 600-619 from .250 to 1.0. They also made some changes in the documentation used in identifying and documenting undisclosed debt that brokers should be aware of.

Are lenders in major metropolitan areas hoping for the return of the $729,750 loan amount? They may get their wish! In the version of the Stimulus Bill passed by the House, and moving on to the Senate, the loan levels revert to where they were last year.

Here, read it for yourself - “(a) Loan Limit Floor Based on 2008 Levels- For mortgages originated during calendar year 2009, if the limitation on the maximum original principal obligation of a mortgage that may purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation determined under section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) or section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1754(a)(2)), respectively, for any size residence for any area is less than such maximum original principal obligation limitation that was in effect for such size residence for such area for 2008 pursuant to section 201 of the Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 619), notwithstanding any other provision of law, the limitation on the maximum original principal obligation of a mortgage for such Association and Corporation for such size residence for such area shall be such maximum limitation in effect for such size residence for such area for 2008….the Director may, for mortgages originated during 2009, increase the maximum original principal obligation limitation for such size or sizes of residences for such sub-area that is otherwise in effect (including pursuant to subsection (a) of this section) for such Association and Corporation, but in no case to an amount that exceeds the amount specified in the matter following the comma in section 201(a)(1)(B) of the Economic Stimulus Act of 2008.”

Rob Chrisman