Higher Loan Limits In New Economic Stimulus Bill
After approving TARP funds recently, Congress is not turning its attention to a new economic stimulus package. This new package is ostensibly designed to help regular folks, rather than to benefit mostly mortgage lenders and banks and other Wall Street types. One of the provisions in the new economic stimulus is said to be higher loan limits for loans issued by Freddie Mac and Fannie Mae, as well as for FHA loans. National Mortgage News Online reports on what the economic stimulus bill is expected to do:
The $825 billion economic stimulus package drafted by House Democratic leaders will restore the $729,750 GSE loan limit in high cost areas until year-end 2009. The package also includes a provision that increases the loan limit on Federal Housing Administration-insured reverse mortgages to $625,500 from $417,000 nationwide. Congress originally raised the maximum loan limit on Fannie Mae, Freddie Mac and FHA loans to $729,750 in February 2008 as part of the first stimulus bill. But that provision expired Dec. 31 and the loan limit adjusted downward to $625,500 where it stands today.
The idea, presumably, is to keep things moving in the housing market (or rather, to get them moving) and to help shore up areas that are seeing dramatic drops in home values. We’ll have to see how this works. I would think that the first priority would be to prevent foreclosures, and as long as these loan limits would apply to refinancing, it might help.
Direct help to homeowners in danger of foreclosure is also being promised by government leaders as they put together this economic stimulus bill. It remains to be seen what kind of help is offered; hopefully it won’t center on giving more money to banks, and hoping that they, in turn, will lend to homeowners rather than hoarding the cash. Because that method of “foreclosure help” didn’t help at all.
