Since 2008, Fannie Mae and Freddie Mac have made loans available in amounts over the standard conforming (i.e. non-jumbo) lending loan limit of $417,000. These loans, which are in amounts of $417,000-$729,250 are known as either High Balance Loans or Jumbo Conforming Loans. These loans were designed to fill part of the gap in the lower end of the Jumbo loan market that disappeared in 2008 with the collapse of the secondary market.
However, the original limits of these High Balance loans was only $625,500. There was a “temporary” 1 year increase of the loan limits to $729,250. This temporary increase, which was extended year-by-year, is set to expire on September 30, 2011. The conventional wisdom now is that the loan limits will not be increased again to $729,250. Therefore, all loan amounts over $625,500 will be considered non-conforming or jumbo loans as of September 30th. This mostly affects 30 year, 15 year and 20 year fixed rate loans since many ARMs are portfolio products (i.e. not sold to Fannie or Freddie) and have consistent pricing up to $1M and sometimes higher.
As such, if anybody has a fixed rate loan in an amount of $625,500-$729,500 and was considering refinancing, you must do so immediately. And, by immediately, I mean this week or next week since the loan must close by September 30, 2011. Wells Fargo has already announced that it will only honor registrations for this higher loan amount if they are in their system by the end of business on August 15, 2011. There is a very small window of opportunity left to refinance these loans amounts, and I strongly suggest people take advantage of it before it closes!