All properties in the conforming-jumbo and FHA-jumbo loan limits are affected by the information below. Be aware if you have a listing or are in escrow where such financing applies you may face a delay in closing of up to four weeks if not funded by December 1, 2008.

As you are aware earlier this year Congress raised the limits on conforming (Fannie/Freddie) mortgages from $417,000 to $729,750 and on FHA from $335,000 to the same $729,750.

These limits are set to expire on December 31, 2008. What that means is lenders must deliver their loans to Fannie/Freddie or FHA by that date. To ensure this we are hearing from our lenders that they will require any of the agency-jumbo and FHA-jumbo transactions (those loans over $417k and $335k respectively) be funded by 12/1/08.

On affected transactions, we must fund on or before November 30, 2008, which is a Sunday and we cannot fund. That means the loan must fund on Wednesday November 26^{th due to Thanksgiving and the long weekend and office closings, perhaps Friday 11/28/08 if lenders, escrow, etc. open. If the property is in LA County that would require recording either Friday 11/28/08 if title is recording or Monday 12/1/08 if title/escrow closed and not able to facilitate recording on the Friday.}

With every lender and loan going through this scenario the pipelines may get very full creating backlogs and slowing the system. Any loans not originated in the next week or so face a very difficult time getting through before the 12/1/08 deadline.

What happens next is that on 12/7/08 the agencies are expected to announce their loan limits for the coming year. It is very much anticipated the limits will be $625,000 as put through by Congress a short time ago. Typically once the agencies announce the new loan limits for the coming year lenders will approve and fund loans on the new limits for delivery after January 1^{st. Given the credit markets we are not yet confident the same may hold true for this year. In other words we could have a moratorium on funding loans over the current base Fannie/Freddie and FHA limits from December 1, 2008 through January 1, 2009.}

What this boils down to is any loan affected not funded by 12/1/08 may be able to be re-locked and funded after the announcement of new loan limits on 12/7/08—a one week delay and who knows the rate impact; or it may get extended to 1/2/09.

We are very actively pursuing our lenders for more information, and they are also working to formulate what will happen with the expiration of the loan limits. We have five weeks until the 12/1/08 deadline and we may see extensions to bridge the loan limit gap--but would presume not unless the loan limits for January 1, 2009 on are the same as the current $729,750 limits.

Please use this information with your clients so they too are aware of the implications of the calendar colliding with the loan limits. Obviously I will keep you abreast of developments that impact our industry and yours.

One final note. Timely information is valuable and a tremendous asset in your building confidence and trust with your client base. Are you getting this type of timely and pertinent information from your current "go-to" lender? Are he or she keeping you up to date on changes in the industry as the happen, or possibly before, so you and your clients can properly plan your transactions? I provide this information freely because I strongly believe the more educated our industry the better we all perform. Refer your clients to a trustworthy and informative broker, me!