Higher Conforming Loan Limits Due to Expire
Unless Congress intervenes, the maximum amount the Federal Housing Administration as well as loans backed by Fannie Mae and Freddie Mac can back will return to $417,000 in most areas and $625,500 in a high-cost areas.
Over the last two years, the government raised the limits in some high-cost areas to $729,750.
If Congress doesn’t extend higher limits, home prices would “drop precipitously” because it would be “impossible to finance homes in most parts of Los Angeles and certain other major cities,” said Rep. Brad Sherman, a California Democrat and member of the House Financial Services Committee,
But many economists support the end to higher limits. “We need to think how we are going to exit from a Fannie-and-Freddie world, and this is a very small step toward that exit,” said Richard K. Green, director of the University of Southern California’s Lusk Center for Real Estate. “Dialing it back to $625,500 is a perfectly reasonable thing to do.”
Source: The Wall Street Journal, Nick Timiraos (09/23/2010)
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NAR: FHA Key to Housing Market and Recovery
The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market, NAR President Vicki Cox Golder told a congressional panel this week.
Testifying before the House Committee on Financial Services, Golder said that the FHA program is fiscally sound with responsible underwriting, and needs enhancements not radical reform. She urged Congress and the administration to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation’s families.
“With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent. Thus far in 2009, nearly 80 percent of all FHA insured purchasers are first-time homebuyers. And if you take a closer look at the numbers, you’ll see that program is doing exactly what it was designed to do—make more affordable mortgage financing available to homeowners,” said Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. Full Story….
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NAR: FHA Key to Housing Market and Recovery
The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market, NAR President Vicki Cox Golder told a congressional panel this week. Testifying before the House Committee on Financial Services, Golder said that the FHA program is fiscally [...]
Prediction: Homes Sales to Rise 11 Percent
Sales of existing homes will rise 11 percent in 2010, and sales of new homes will climb 21 percent over this year, Mortgage Bankers Association Chief Economist Jay Brinkmann predicted in a speech Tuesday at the organization’s annual meeting.
“We still see a concentration in the lower end of the market,” Brinkmann said. “The entry level homes are in demand.”
Brinkmann also predicted further declines in existing home prices, with the median falling to $164,200 in the first quarter of 2010.
David Stevens, commissioner of the Federal Housing Administration, concurred, adding that mortgage rates will rise to 5.6 percent by the end of 2010, though not enough of an increase to discourage a 12 percent increase in mortgage applications next year.
Source: Associated Press, Alex Veiga (10/13/2009)
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Will Taxpayers Have to Bail Out FHA?
The Federal Housing Administration stepped up to guarantee low-down-payment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.
Some housing analysts believe that this will lead to tighter restrictions on FHA mortgages. “It absolutely changes the political dynamic once you have to ask taxpayers” for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.
Source: The Wall Street Journal, Nick Timiraos
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