From HW:
A group of 131 members of Congress sent a letter to House leaders this week, pressing for a restoration of higher limits for mortgages guaranteed by the government.
Congress elevated the conforming loan limits in 2008 to allow the Federal Housing Administration, Fannie Mae, and Freddie Mac to insure and guarantee more mortgages when the credit markets froze.
On Oct. 1, the elevated limits dropped to $625,500 from $729,750 in the most expensive neighborhoods. In each area, the cap dropped to 115% from 125% of the area’s median home price. Previous legislation introduced in the House to extend the limits never made it out of committee.
But the Senate approved an amendment to a spending bill Oct. 20 that would extend the conforming loan limits through 2013. A joint appropriations committee is scheduled to begin meeting this week and will consider the spending bill.
“Forcing this transition in a weak market, before the private market has shown the willingness to take on additional mortgage risk is not wise policy during a housing crisis,” said Rep. Gary Ackerman (D-N.Y.), echoing calls for restoring from major trade groups from the mortgage and real estate industries.
The effect of the conforming loan limit drop remains in question. A study from the Federal Reserve shows a very small effect from the drop, while a separate study from the National Association of Homebuilders claims millions of homebuyers could be shut out of financing.
The Obama administration and top House Republicans have supported allowing the conforming loan limits to expire as the first step to getting private capital back into the market.
But in their letter to Speak of the House John Boehner (R-Ohio) and Rep. Nancy Pelosi (D-Calif.), the group of lawmakers said there is no evidence of that happening.
“Many of us have hoped that private lenders would be ready to return to the housing markets and enable us to reduce the federal role, but this has not yet happened,” the letter reads. “The reluctance of private lenders to lend coupled with the lower current limits will adversely impact the housing market.”
From MND:
Yesterday we noted that event in Europe were once again the dominant force moving markets, including the secondary mortgage market, albeit indirectly. In a true testament to that fact, today’s FOMC Announcement (Fed rate decision, although it’s not that markets are considering that the Fed might change rates, just waiting to hear what they have to say about other monetary policy decisions) did very little to move markets. Mortgage rates held steady to slightly improved.
Today’s Rates:
•BESTEXECUTION 30YR FIXED – more evenly split between 3.75 and 3.875
A prudent person (not “consumer”) would be wise to ponder why the government is so keen on encouraging it’s citizen/consumers to encumber themselves with such a massive debt burden.
“A prudent person (not “consumer”) would be wise to ponder why the government is so keen on encouraging it’s citizen/consumers to encumber themselves with such a massive debt burden.”
It’s hard to have mega rich and a large retirement population unless you can get the productive segment of the population to voluntarily provide goods and services. I.e. get them to take on debt so you can force them to provide you goods in services in the future.
Ahh, that’s the Golden Lock: work hard in order to buy (=get a loan) a house, and then work even harder to pay that loan. As we know, this formula got badly broken during 2001-2006 when a home ownership (=loan) didn’t require any hard work rather than just a “fog test”. And now government is trying to fix this problem by supporting in all ways those bigger home loans rather than helping people to get jobs to actually pay for their homes… Just makes me hmmmm…
Don’t government works generally make twice those of the private sector to afford these homes?
Clearly this is all about helping Middle Americans, as they clearly won’t survive without their $730K conforming loans. /sarcasm
It’s only been a month and already the sky is falling.