Total Mortgage's John Walsh Sees Hope in National Loan Limits

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John Walsh, CEO of Total Mortgage Services in Milford CT, is an entrepreneur who has built his mortgage company into a 25-state powerhouse that is continuing to expand. He is a forward thinker, and maybe a bit of a contrarian, who entered wholesale banking last year, with his wholesale channel TMS Funding, when the too-big-to-fail banks like Bank of America pulled out. But he must be onto something, as Total Mortgage has never had to repurchase one of its loans. In addition Walsh is an outspoken advocate for mortgage finance at a time when many lenders are putting their money elsewhere.

Yet he's frustrated by what he sees in the year to come. At the top of his list of concerns is negative equity.

With nearly one out of four homeowners with a mortgage underwater today— he's frustrated. It's virtually the same percentage as four years ago and Walsh thinks that the government needs to enact policies that would support the stagnant purchase market. Federal efforts, such as HARP 2.0, mostly aim to encourage refinancing. He feels we need a more comprehensive solution to our housing woes. The problem is so big and complex that it has defied the best efforts of the federal government and the nation's financial sector.

Walsh also stated that if the European debt crisis is solved we could see interest rates rise very quickly and he holds little hope for progress during this election year in reforming Fannie Mae and Freddie Mac. Furthermore, he's concerned about the slow purchase mortgage market, which probably won't improve until the employment picture improves significantly.

However, there's one step the government could take that would cost virtually nothing and reduce the costs of buying a home for thousands. He'd like to see the government raise Fannie, Freddie and FHA loan limits to $729,750 for all markets, not just high-priced ones.

"Why should the higher limits be limited to a few areas? Higher loan limits would make tens of thousands of homes eligible for FHA and GSE financing. It would save GSE and FHA borrowers a lot of money via refinancing and would boost the purchase market, with FHA borrowers able to purchase homes with down payments starting at 3.5%. "The trickle-down effect of these additional purchase transactions would help stabilize the housing market and would benefit the overall economy" he said.