Our Market and the Economic Stimulus Package

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.

Comments

[Keith Junor]

I believe that the middle class are the ones that are suffering the most in this mortgage meltdown because the loan amounts for FHA especially are too low to help these folks out.

We definitely need the president and the fed to get more involved in getting the loan limits raised in order to help middle class homeowners that are heading towards foreclosure.

[Steve Harisiades, Regency Mortgage Corp]

Keith, as with any economic downturn the middle class are always the one’s most impacted; or is it simply because the middle class (them, me, us), the largest socio-economic group in the country garnish the most news coverage? I think it’s fairly safe to say the poorest are suffering exponentially; and dare I say even the wealthiest upper middle class/rich are suffering the effects of this housing crisis that has; to put it mildly, shaken the world markets.

FHA has in fact increased their loan limits; this information came from an email notification this past Thursday, you can follow this link and search your state by county for those increases https://entp.hud.gov/idapp/html/hicostlook.cfm . If you’re interested you can also receive these updates by sending an email to jerrold_h._mayer@hud.gov listing on the email those within your organization who want to receive email updates. These increases should help us mortgage planners assist more homeowners in obtaining the dream of homeownership. Additionally, the FHA secure program is enabling some subprime victims…errrrr borrowers the ability to refinance their current mortgage into one with a fixed rate. Initially the programs was rather restrictive but since inception become more accepting. Lastly to assist the consumer group that bought and financed properties in what the mortgage industry terms Jumbo, loan amounts greater than the Fannie Mae, Freddie Mac limits. These increases are for specific high cost areas, you can view the eligible area by going here https://www.efanniemae.com/sf/refmaterials/loanlimits/jumboconf/xls/loanlimref.xls . Enabling them to refinance their ARMS, Piggyback Mortgages and High Rate Jumbos. However is this really a good thing overall; if Fannie Mae and Freddie Mac attempt to combine the jumbo loans into the existing mortgage backed security issuances the spread between jumbo rates and conforming rates will narrow with conforming rates rising due to the increased risk and need for additional yield from investors, yes admittedly impacting the middle class.

My name is Steve Harisiades, I’m a live long resident of New Hampshire and I’ve been a mortgage “Planner” for seventeen years in the Greater Manchester area. I've known, been friends with and have worked with Suzanne Damon approximately twelve years. If you'd like to ask me any questions about mortgage financing you can do so directly by emailing me at steve@regencymtg.com.