As a REALTOR, and
a constituent, I want to stress how important it is for us to
motivate the Senate to vote for increases in the FHA and GSE
loan limits in the Senate's economic stimulus package. These provisions will
create safe and affordable mortgage options for our state's homeowners and
provide much needed stability for our local economies.
The critical role that Fannie Mae
and Freddie Mac (GSEs) play in providing liquidity to the mortgage market has
never been more evident than it is today. The national sub prime meltdown has
had a dramatic impact on both the cost and availability of mortgages in my
market. 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.
Raising the GSEs' conforming loan
limit will provide immediate relief to borrowers and alleviate downward
pressure on our already fragile housing markets. According to the National
Association of REALTORS, increasing the GSE loan limit will result in more than
300,000 additional home sales and strengthen current home prices by 2 to 3
percent.
I also believe that increasing the
FHA loan limits is critical to helping bolster our fragile 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 costs 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. These increases will help an additional 138,000 Americans
purchase and 200,000 families refinance their homes safely and affordably.
I hope we can rally enough
support to include increases for the FHA and GSE loan limits in the
Senate's economic stimulus package. Our national housing and mortgage finance
markets need stability and an immediate infusion of liquidity. Both of these
provisions are necessary if our nation's families, housing markets and economy
are to move beyond the crisis they now face.
