By Alicia Lanier, REALTOR
Yesterday Congress sent its economic stimulus bill to the President’s desk and he is expected to sign it. This important legislation includes the much-discussed taxpayer rebates, and increasing conforming loan limits from $419,000 to $729,750, a happy sign for California home buyers who pay higher interest rates on their non-conforming, or so-called “jumbo” home loans. I would also venture to say this is happy news for all the sellers who have been wondering where buyers have been hiding in recent months.
Here’s a message from the California Association of Realtors (CAR) that was received yesterday with their view on this package:
“Thanks in part to lobbying by CAR (California Association of Realtors) and NAR (National Association of Realtors) members, the Senate passed their version of an economic stimulus package today, Thursday, February 07, 2008. The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package. The House just passed the Senate version of the bill and it will now be sent to the White House. The President is expected to sign the legislation by the end of next week, ahead of the Congressional self-appointed deadline of February 15th. The increase in the conforming loan limits will last through 2008, but C.A.R. and NAR continue to lobby for FHA and GSE reform, making these increases permanent.
“The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas. By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.
“Increasing the FHA loan limits is critical to bolstering California’s housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices.
“Additionally, raising Fannie Mae and Freddie Mac’s (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%.
“The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.”
Related Posts:
January 26, 2008, Silicon Valley Home Buyers Give Three Cheers for House Plan to Raise Cap on Conforming Loans
November 29, 2007, Affordability Issues for Silicon Valley Home Buyers Deepen with Feds’ Jumbo Loan Decision for ‘08
Alicia Lanier is a REALTOR and member of the Coldwell Banker Diamond Society – Top 8% of Agents Internationally www.AliciaLanier.com 408-491-1634
REALTOR Alicia Lanier's Hometown Silicon Valley 