February 6th, 2009 4:16 PM by Dan Marchiando
The 2008 Economic Stimulus Package is now old news and we are now operating on the Housing and Economic Recovery Act (HERA) signed in July of 2008. The temporary Jumbo-Conforming mortgage loans that went to $729,750 are now gone as of December 31, 2008. For 2009 HERA brings us Agency Jumbo "High-Balance" loans that in Santa Barbara County go to $603,750. Rates on these "High-Balance" loans started out for a week or so at rates just a little above Conforming loan interest rates. But the HERA law that created these loans also limited them to ten-percent of the dollar balance of loans that a lender can sell to Fannie Mae and Freddie Mac, and lenders have since raised rates on these "High-Balance" loans to put the brakes on them. Old-school Jumbo loans with balances over $603,750 are a rare item, as banks have no place to sell them, and are reluctant to originate them and hold them in their already sickly portfolios of loans.
Many niche lenders have failed. Only some of those lenders were subprime lenders. The surviving lenders have reduced the variety of loans they offer, and have also increased their qualification standards. There has also been a lot of consolidation in the banking industry; Chase swallowed WAMU; Wachovia swallowed World, and then Wachovia was swallowed by Wells Fargo; Bank of America swallowed Countrywide. All lenders are increasingly focusing on credit scores, and pricing their loans accordingly. More than ever before, a one point difference in credit score can make a considerable difference in the interest rate, and consequently the interest cost, of a mortgage loan. So it pays to pay attention to your credit file and score.
Mortgage insurance companies are also requiring higher credit scores in California than in other states. The minimum FICO score for a loan at 85% loan-to-value is 700 in CA. For 90% loan-to-value, the mortgage insurers are requiring a minimum 720 FICO score.
There are hundreds of annoying websites that promise free reports, but don’t truthfully deliver. These look-alike sites pretend to be the real free site, but they are (in my opinion) deceptive opportunists at best or scammers at worst. The official free credit report site that was required by the Federal government FACTA Act in 2003 is: www.AnnualCreditReport.com.
Be aware that the law only requires the three credit reporting agencies to provide free credit reports once a year. They are not required to provide free credit scores. However, you can purchase a score from each of them, although I don’t recommend it. I only recommend purchasing the FICO® score available from Equifax. The scores from TransUnion and Experian are not true FICO® scores. Although the site has now been available for a few years, statistics show that millions of people have not accessed their free reports. So, following is a short step-by-step for pulling an Equifax credit report from AnnualCreditReport.com so you can get started today.
1. Go to the Home Page. Select California as your state and click on Request Report.
1. Go to the Home Page.
Select California as your state and click on Request Report.
2. Enter personal information on secure server.
3. Choose who you would like to order report from –
Equifax, TransUnion and/or Experian.
4. Personal Info Check.
I chose Equifax and was transferred to their site. Re-enter personal
5. Answer credit account questions to verify your identity. You will want to do this when you have access to your account records.
5. Answer credit account questions to verify your identity.
You will want to do this when you have access to your account records.
6. Choose whether to purchase your score or not.
You don’t have to purchase anything to see your free credit report
alone. Skip the expensive credit monitoring. Pay for score in next
Assuming that everything is good in your credit report today, I would recommend that you request your TransUnion or Experian report 4 monthsfrom now. If you have issues with your Equifax report now, then you maywant to check all three reports today for errors. Please keep in mind thatclosing accounts will generally lower credit scores, not raise them. You arevery likely to have questions about your report, so don’t hesitate to call oremail me with any questions.
Assuming that everything is good in your credit report today, I would
recommend that you request your TransUnion or Experian report 4 months
from now. If you have issues with your Equifax report now, then you may
want to check all three reports today for errors. Please keep in mind that
closing accounts will generally lower credit scores, not raise them. You are
very likely to have questions about your report, so don’t hesitate to call or
email me with any questions.
Thanks for your interest,