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Temporary Conforming Loan Limits ReleasedThe Office of Federal Housing Enterprise Oversight (OFHEO) today released the maximum conforming loan limits that will be in effect through year-end as a result of The Economic Stimulus Act of 2008. That legislation permits Fannie Mae and Freddie Mac to raise their conforming loan limits in certain high-cost areas. The new limits are a function of median home prices as estimated by the U.S. Department of Housing and Urban Development (HUD). The maximum for temporary conforming loan limits, which apply to loans originated in the period between July 1, 2007 and December 31, 2008, are as high as $729,750 for one-unit homes in the continental United States. Two, three and four-unit homes have higher limits as well. Fannie and Freddie are reported to be working out new underwriting standards and expect to begin offering the new loans soon. The Fed’s economic stimulus package approved earlier this year called for temporary increases on conforming and FHA loan limits to allow troubled borrowers to refinance out of sub-prime loans and make it easier for many new buyers to qualify for mortgages in high-cost areas, particularly in California where home prices remain among the highest in the nation. As a secondary effect, it is hoped that this will act as a stimulus to encourage buyers back in to the market. Before this relief, many buyers in California needed to finance with Jumbo loans just to purchase medium income homes in many of our metropolitan markets. A jumbo loan, or non-conforming loan, is simply a loan that exceeds the conforming loan limits. Because Fannie Mae and Freddie Mac do not buy these loans, the secondary market for jumbo loans is less competitive, and as a consequence, the interest rates for these loans are higher. Jumbo loans are also more stringent in overall requirements for qualifying. At some points in 2007, the credit crunch experienced by banks made Jumbo loans difficult to obtain, even for those borrowers with superior credit. To view a list of the new FHA Mortgage Limits by county, go to: FHA Loan Limits by County To find out more information on real estate and mortgages check out our websites at www.geoffre.com and www.peterwolfre.com. |