Is the Economic Stimulus Bill (H.R. 5140) that President Bush signed into existence last week temporarily un-stimulating the jumbo housing market? The shotgun approach to implementing this new legislation has left many hanging in limbo.
The new legislation will raise the conforming mortgage loan limits up from the $417,000 to as much as $729,750 in high cost housing markets. Uncertainty rings out in the country as consumers are overloaded with contradicting news on the subject. One client told us "I spoke with [my current lender] and they can't help because the information has not been disseminated to the front lines". Lack of information and mis-information have led to an even further temporary slowdown in the higher end housing market as people are not sure when they will be able to get the lower conforming rates. Even consumers that are in escrow on new purchases, affected by the new limits, are attempting to get their contracts extended. These people know that refinancing, when the new limits take effect, will be costly and difficult.
These delays and extensions do come with their own inherent risks. Many of those that delay could see interest rates rise which would negate any potential savings and lenders could continue to tighten up on lending guidelines. This would leave many people that would no longer qualify for a loan.
The Stimulus bill has HUD (Department of Housing and Urban Development) on a deadline of March 14th to come up with a published list of new conforming loan limits. The new limits are expected to be based on the median home price in the county where the property is located, except for properties that lie in multi-county metropolitan areas. In those areas the limits would be set to the highest cost county.
What should you do now? If you are thinking about refinancing a loan that will be affected by these new limits, It may be worth waiting and see where things go. If you are in the process of purchasing a home that is affected by this bill; you will want to check with your team of real estate professionals to look at your options and see what the best course of action will be for you.
The news and speculation will continue to be confusing and in some cases contradicting. As with anything, time will tell. Until March 14th all that anyone can do is to speculate where the new limits will be. I will continue to post updates here on this topic. Comments are always welcome.
If you are interested in following HR 4150 Stimulus Bill information, regarding mortgage lending limits, as it unfolds, then please subscribe to this blog or email me at telder@tomelder.com requesting to receive updates. HUD Maryland Bush Bailout -see more about me here. Call Toll Free 1-800-431-8348 x701
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Tom - You are right on the money. I just finished a meeting with my partners and Loan Officers and were discussing the exact same thing. In my opinion, the only thing that the bill has stimulated is confusion and paralysis. And why a deadline of March 14? Could Congress not have spent its time a little more wisely the past 10 days? Or was it absolutely necessary for all of us to find out that Roger didn't inject steroids, but that the NFL did destroy video evidence? (Don't get me wrong, as a Met fan I loved seeing Clemens twist in the wind.) I will be subscribing to your blog to follow the bill. Thanks.