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Congress is slow to act, but when they do it’s like watching them kill ants with a sledge hammer.  We can use their over-kill approach right now!  They sure waited long enough, right?

It’s been an interesting roller coaster ride for mortgages over the last year and just when you think the ride is slowing, there’s yet another thrill.

Significant action is being taken by the federal government to stabilize the housing market - Hot off the press from our industry cooperative partners

As part of the economic stimulus package being negotiated by House Democrats and the Treasury Department, Fannie and Freddie loan limits will be increased for one year up to $730,000.   The increase will be adjusted for local markets at 125% of local median home price.  The move will significantly improve liquidity and pricing in the jumbo market.   The agreement also includes raising the FHA loan limits to the same amount.  We are trying to confirm whether the other provisions of FHA reform will be included (such as lowering down payment requirements).   But at a minimum, the loan limits will be increased.

This represents an agreement in principle and must still go through the legislative process.  Based on information from folks wiser than I, my best guess is that this will happen sometime after the State of the Union next week, likely progressing into early February.

You may have heard the good news about this proposed Economic Stimulus Package being rushed through Washington. The package, which has favorable momentum, includes a provision that would - for a limited time - increase the maximum Conforming loan amount as high as $729,750 in high-cost markets. This could be great news for California homeowners.

How could this affect you?

If this package is approved, and your mortgage loan (or combination of loans) is up to $729,750, you could qualify for the lower Conforming loan rates. Typically the rate difference between Conforming and Jumbo loans can be as much as one-and-a-half points. On a $500,000 loan, that’s a savings of over $600 per month!

This creates a tremendous refinance opportunity!

If your mortgage, or first + second mortgage, fall within the new proposed Conforming limits, call your lender or myself. This policy change could potentially save you and your clients thousands of dollars.

Also, the Fed meets again next week. I’ll keep you up-to-date on that as well.

Please call me or reply to this email if you have any questions or would like to discuss your scenario.

Warm Regards,

Ken Braillard

Vice President

Chicago Title Company