Raising The Conforming Loan Limits
Categories: Front Page, Mortgage News, Real Estate News
hi
Yesterday, the US House of Representatives overwhelmingly passed HR 5140 – an economic stimulus package that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,750 in high-cost areas. The temporary increase would last only until the end of 2008. The bill would also restrict Fannie Mae, Freddie Mac and the Federal Housing Administration from guaranteeing or purchasing loans above 125 percent of the median home price for a given area. That means that the existing $417,000 conforming loan limit for mortgages eligible for purchase by Fannie and Freddie would not increase in areas where the median home price is $333,600 or less. The problem of course, is that as of right now, no one knows what the “official” median home price is in different markets because this data has never been published by HUD!
Therefore, it would be up to the Secretary of Housing and Urban Development to determine the median home price for different housing markets “as soon as practicable,” but no later than 30 days after passage of the bill, relying on existing commercial data where needed. In other words, if median home prices in your marketplace are $336,000 or less, this bill won’t really affect you; and there’s no way to tell if median home prices in your area are higher than $336,000 until HUD publishes this data. Nevertheless, it appears that some form of jumbo relief is certainly on the way. An increase in the conforming loan limit coupled with the property tax relief that Florida voters passed last night is sure to wake some of the sleepy “move up” buyers from their slumber. Additionally many current homeowners will be able to refinance their “jumbo” mortgage into much lower rate conforming loans providing for additional relief.
In order to make higher limits a reality, the next step is for the Senate to pass the bill and for the President to sign it into law. The target date for final passage set by the White House and Congressional leaders is February 15, so let’s hope for the best and I will be sure to keep you posted as we have more information.
Sources and helpful links:
· HR 5140
· FHA Loan Limit Search – (Current Limits)
Obviously this is huge news for the mortgate industry. What is a typical timeline for this sort of thing. I mean are we talking weeks, months?
I’m assuming this is going to happen sooner than later if it does.
Boy what a great (and demanding) time to be a Loan Consultant $$$$. I mean if this happens and you are prepared for the rush a loan agent could make a bundle.
Ryan, Congress has set a goal of having the legislation passed by Feb. 15th, however once passed and signed by the President it might be several weeks before the infastructure is in place to start providing loans under the new conforming limit. The most reliable sources are indicating March or even April.
James, Thanks for getting back on this hot issue. The conforming loan limit has never made sense to me. I mean it really should be relative to the area you live in. For myself, living in California, the limit seems unfair given the median home price. Now if I were living in another area of the U.S. where the median home price is 250K then if wouldn’t be an issue.
The problem I see is there are more Rep’s from states with median home price under the current conforming loan limit than above the current limit. I mean why would they care? I just don’t see these people backing this initiative.