Jumbo Loans Finally May Get Help...
If you are a homeowner trying to sell - and your property is over 500k in value - you were probably hurt by the fact that after the lending crisis started - lender jacked rates for jumbo loans by 1-2 percent or more over existing conforming loans under 417k.
That meant that if someone wanted to purchase your home - it would cost more than normal - meaning that you had to lower your price more than normal - meaning that you
got really hosed by the lending crisis. Hopefully - that will change to some extent - though the proposal only boosts the conforming loan to 625k.
It took too long - but finally - a $150 billion economic stimulus plan being negotiated by the Bush administration and congressional leaders could include a temporary boost in the $417,000 conforming loan limit on mortgages eligible for purchase or guarantee by Fannie Mae and Freddie Mac.
The government-sponsored enterprises, or GSEs, may soon be allowed to back loans up to $625,000 nationwide and $700,000 or more in high-cost areas.
The Bush administration had previously tied any increase to the conforming loan limit to tighter regulatory oversight of Fannie and Freddie, where accounting scandals led both companies to fire top managers and restate several years of earnings.
Congress has been deadlocked on legislation overhauling oversight of Fannie and Freddie for several years. House leaders of both parties have agreed to increase the conforming loan limit to $625,000 for one year, although Senate lawmakers and the Bush administration had not signed off on the idea.
Some Senate Democrats had been pushing for an even larger increase in the conforming loan limit in high-cost areas like California and Florida.
The administration still sees an increase in the conforming loan limit as tied to GSE reform.
Jumbo loans that exceed the conforming loan limit have become more expensive and harder to find since August. Wall Street investors have drastically scaled back purchases of securities that had been a primary source of funding for jumbo, alt-A and subprime loans because of fears about rising defaults and falling home prices.
In states like California and Florida (or in the Chicago area where many homes are over 500k),the increased cost and reduced availability of jumbo loans has been blamed for worsening the housing downturn.
The National Association of Realtors maintains that raising the conforming loan limit to $625,000 would prevent 140,000 to 210,000 foreclosures, bolster home prices by 2 to 3 percentage points, and increase economic activity by $42 billion.
California Gov. Arnold Schwarzenegger this week urged Congress to pass legislation to raise the conforming loan limit to $625,000 in high-cost housing markets, saying about half of all home purchases in the state require mortgages that exceed the current limit.
Fannie and Freddie may report as much as $16 billion in fourth-quarter write-downs tied to the declining value of securities backed by subprime mortgage loans. The problem is more pronounced at Freddie Mac, which could be forced to declare $11 billion in write-downs.
That meant that if someone wanted to purchase your home - it would cost more than normal - meaning that you had to lower your price more than normal - meaning that you
got really hosed by the lending crisis. Hopefully - that will change to some extent - though the proposal only boosts the conforming loan to 625k.
It took too long - but finally - a $150 billion economic stimulus plan being negotiated by the Bush administration and congressional leaders could include a temporary boost in the $417,000 conforming loan limit on mortgages eligible for purchase or guarantee by Fannie Mae and Freddie Mac.
The government-sponsored enterprises, or GSEs, may soon be allowed to back loans up to $625,000 nationwide and $700,000 or more in high-cost areas.
The Bush administration had previously tied any increase to the conforming loan limit to tighter regulatory oversight of Fannie and Freddie, where accounting scandals led both companies to fire top managers and restate several years of earnings.
Congress has been deadlocked on legislation overhauling oversight of Fannie and Freddie for several years. House leaders of both parties have agreed to increase the conforming loan limit to $625,000 for one year, although Senate lawmakers and the Bush administration had not signed off on the idea.
Some Senate Democrats had been pushing for an even larger increase in the conforming loan limit in high-cost areas like California and Florida.
The administration still sees an increase in the conforming loan limit as tied to GSE reform.
Jumbo loans that exceed the conforming loan limit have become more expensive and harder to find since August. Wall Street investors have drastically scaled back purchases of securities that had been a primary source of funding for jumbo, alt-A and subprime loans because of fears about rising defaults and falling home prices.
In states like California and Florida (or in the Chicago area where many homes are over 500k),the increased cost and reduced availability of jumbo loans has been blamed for worsening the housing downturn.
The National Association of Realtors maintains that raising the conforming loan limit to $625,000 would prevent 140,000 to 210,000 foreclosures, bolster home prices by 2 to 3 percentage points, and increase economic activity by $42 billion.
California Gov. Arnold Schwarzenegger this week urged Congress to pass legislation to raise the conforming loan limit to $625,000 in high-cost housing markets, saying about half of all home purchases in the state require mortgages that exceed the current limit.
Fannie and Freddie may report as much as $16 billion in fourth-quarter write-downs tied to the declining value of securities backed by subprime mortgage loans. The problem is more pronounced at Freddie Mac, which could be forced to declare $11 billion in write-downs.
Labels: bush, conforming, fannie mae, freddie mac, jumbo, limit, loan
posted by Rick Hauser at
8:52 PM
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