A new report over at MarketWatch.com indicates that only a handful of US counties will see the higher end of the new loan limits stipulated in the recently passed economic stimulus package. Thankfully, most counties don’t need to reach the high end to help people. Here is an excerpt:
ORLANDO, Fla. (MarketWatch) — Only 15 counties in the U.S. have a median house price high enough to qualify for the temporary increase in the maximum loan limits called for in the economic stimulus package, an indication that the big jump may not help as many home buyers and refinancers as originally expected.
The National Association of Home Builders had hoped that as many as 29 metropolitan areas would qualify for the new $729,725 ceiling. But according to a staff member at the group’s convention in Orlando last week, it now appears that less than 10 will make it.
The NAHB has been saying that more than 3 million additional owner-occupied houses will be eligible for what are now being called “jumbo conforming” loans that can be purchased by Fannie Mae and Freddie Mac, the two government-sponsored enterprises charged with brining liquidity to the mortgage market.
But with just 15 counties moving to the maximum, and most of those in Southern California, it’s possible only half that number of houses will qualify.
NAHB officials also expressed concern that Fannie and Freddie’s safety and soundness regulator, the Office of Federal Housing Enterprise Oversight, will drag its feet in approving the GSEs’ programs to buy the higher-limit conforming loans.
During a Housing Finance Committee meeting, past NAHB presidents Bobby Rayburn and Kent Conine repeatedly hammered at an OFHEO officer that speed is of the essence, especially since the cut-off for Fannie and Freddie to buy the larger loans is Dec. 31.
The good news, according to Federal Housing Administration Director Joanne Kuczma, is that the median price of houses in 85% of the country’s 3,300-plus counties is high enough to qualify for a higher ceiling on FHA loans, as also set forth in the stimulus package signed by President Bush last week.
The measure boosts the limit on loans that can be insured by the FHA to the same $729,750 in high-cost areas and raises the floor on government-insured loans from 95% of an area’s median to 125%.
Under the new floor, the FHA limit would be $271,050, regardless of an area’s median home price. But that’s still substantially below the current Fannie-Freddie lid of $417,000.
The law requires the FHA to calculate the ceilings and put them in place within 30 days after the President signs the stimulus legislation. It also requires Fannie Mae and Freddie Mac to operate under those calculations.
Kuczma told the NAHB last week that a mortgagee letter notifying lenders of the new limits already has been written and will be sent within a few weeks. Until then, no one knows for certain what the ceilings will be for any particular market.
