Congress Passes Legislation Extending Loan Limits Scheduled to Expire on 12/31/09.

On October 29, 2009 Congress passed legislation to keep the U. S. government running through December 18th. Included in this legislation is a provision that will extend the temporary loan limits for Fannie Mae, Freddie Mac and FHA. The higher loan limit ceilings were first authorized as part of a 2008 stimulus package and were extended through 12/31/2009 earlier this year.

The loan limits will remain at $729,750 through 12/31/2010. "While those loan limits aren't scheduled to go down to $625,500 until Jan. 1, if not maintained at the higher level now, the mortgage industry will begin to plan for loans at the lower amount," said appropriators said in a statement. "This could result in major disruptions in the mortgage origination market for large loan sizes as early as November. 

This legislation is particularly important in high housing cost areas because the secondary market for "Jumbo" loans has not recovered since it's collapse at the the beginning of the housing crisis.

In related news, the U. S. Senate won't vote until next week at the earliest on proposals to extend the $8,000 tax credit for first-time homebuyers. The Obama administration is officially asking Congress to extend the tax credit for first-time homebuyers. "I think the first-time home-buyer credit is a great example of funding that's helped to stabilize the housing market and should be extended." Jared Bernstein, chief economist to Vice President Joe Biden, said on Bloomberg television. Treasury Secretary Timothy Geigher gave his support earlier.

Lawmakers announced earlier this week a plan to attach the tax-credit proposal to a pending bill on unemployment benefits. The lawmakers want to extend the credit until April 30, 2010. The proposal would expand the tax credit to allow higher-income Americans and some that already own homes to quality for the break.

Homebuyers who have lived in their prior residences for at least five years may receive a credit of $6,500 under the plan, said Senate Finance Committee Chairman Max Baucus. Also, couples earning as much as $225,000 and individuals as much as $125,000 would quality for the extended break, Baucus said. That's an increase in the limit of $75,000 for individuals and $150,000 for couples. 

"The success of the American economy is closely tied to the success of the housing market; by helping to stabilize the housing market, the homebuyer tax credit has help shore up the economy as it begins to recover," said Baucus, a Montana Democrat. "This plan would enable an even greater number of potential homebuyers to take the credit."

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Whether your looking to buy or refinance, call me today. I'm here to help. The best place to reach me is at my home office 301.353.9360. You can also email me at mtginfo@aol.com

Alan Gross
Home Office: 301.353.9360
Email: mtginfo@aol.com
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