Fannie Mae & Freddie Mac Changes on the Horizon

Mortgage and Lending with All California Lending BRE# 01458390

If you have been paying attention to the recent news surrounding the economic stimulus package, you know that conforming loan limits are set to rise.  Old limits of $417,000 are being changed on a county by county basis, based on the median home prices for that particular county.  That is good news for the housing market, but more changes are on the horizon.

Just raising the conforming limit (the maximum loan amount Fannie Mae and Freddie Mac can purchase) is a good first step, but more needs to be done to get us out of the current housing crisis.  An additional issue is the liquidity of the credit markets, especially in the mortgage lending world. 

As banks take back more and more properties, they are slashing their asking prices to get them off their books.  So not only do we have a glut of homes on the market, but we have a large percentage of them as bank owned.  Banks don't want to own property, and are willing to take the large losses that come with the reduced price they must market them at to sell in a timely manner.  In the local East Contra Costa real estate market, over 50% of homes currently on the market are either foreclosure or bank owned properties. 

More liquidity in the mortgage markets will help by allowing more people to buy these homes.  With the recent changes, it is anticipated that refinancing activity will increase as borrowers with adjustable rates resetting higher will be able to qualify for more affordable fixed rate mortgages.  A couple of proposed changes on the horizon should help out with those liquidity issues as well.  These upcoming changes are not a cure all, but they are surely a step in the right direction.

If you would like to read more details on the proposed changes, please read the rest of this post on my personal real estate blog.

If you have questions regarding the new limits, guidelines or rates, or if you are in the market for a California home loan, please feel free to contact me for more information.



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