High Balance Loans
A conforming loan is one that is sold to one of the Government Mortgage agencies FHLMC or FNMA (Freddie Mac & Fannie Mae). Each year the agencies set the loan limits in response to changes in housing affordability nationwide. The current conforming limit is $417,000. For 2011 the conforming limit is going to stay the same.
Conforming High Balance loans were introduced as a temporary fix by the government mortgage agencies in response to the illiquidity of the Jumbo loan market which basically vanished during the financial crisis. Under this temporary program, Freddie and Fannie buy loans up to a limit of $729,750 based on the housing costs by county. This is the limit for the down state NY market where housing costs are higher than the national average.
A High-Balance Mortgage Loan is defined as a conventional mortgage where the original loan amount exceeds the conforming loan limits published yearly by the Federal Housing Finance Agency (FHFA), but does not exceed the loan limit for the high-cost area in which the mortgaged property is located, as specified by the FHFA. The conforming loan limit is $417,000 and the high-cost area limit is $625,500 for a 1-unit dwelling in the continental U.S. Every borrower on a High-Balance Mortgage Loan must have a valid FICO score based on an established credit history. The use of alternative credit references is not allowed in lieu of a valid FICO score based on an established traditional credit history. If mortgage insurance is financed with the maximum LTV, including financed mortgage insurance premium cannot exceed ninety percent (90%) for a purchase or rate term re-finance transaction. If the mortgaged property was purchased within the prior six (6) months, the borrower is ineligible for a cash-out re-financed transaction type. High-Balance Mortgage Loans are not eligible as expedited re-financed transactions. Cash-out re-finance transactions are allowable only for Primary Residence property types (see Underwriting Guide, Chapter 2.2.4, for maximum LTV and TLTV for affordable Housing Program Loans). If the Mortgaged Property is a condominium property type, the appraisal must contain at least two (2) comparable sales from outside the Mortgaged Property’s condominium project in addition to comparable sales available from within the Mortgaged Property’s condominium project.
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