President Bush is expected to sign emergency legislation this week that would act to stimulate the sluggish national economy - including an increase in federal conforming loan limits - following the measure’s approval by the U.S. Congress last week. Under the bill, the limit on federally guaranteed mortgages will rise to nearly $730,000 in high-cost markets in California. Whether limits will rise above the current limit of $417,000 depends on area home prices. The measure provides that lenders earn a federal guarantee on loans up to 125 percent of a county’s median home price, not to exceed $729,750. It’s expected that 21 counties in California will see limits increase. While the change in conforming limits is expected to stimulate sales in sagging housing markets, it’s only temporary - it’s set to expire on December 31, 2008 - so NAR, CAR, and CBIA are gearing up for Round 2 of lobbying Congress and will be asking that the change be made permanent. Governor Wants Action to Revive Housing Industry this Year California homebuilders met with Governor Schwarzenegger last week to discuss actions that the state could take to help revive the sagging homebuilding industry. The Governor was briefed by the CBIA members in attendance on the depth and breadth of the current housing recession, including the economic and fiscal impacts of the slowdown. It was reported, for example, that the state lost an estimated $2 billion in tax revenues last year due to extremely low housing starts. All in attendance at the Capitol meeting agreed that the federal government’s pending increase in conforming loan limits would help, more could be done by the state, including an extension of expiring subdivision maps, authority to allow homebuilders to pay impact fees at close of escrow and relief from baseless CEQA lawsuits. In addition to those reforms, CBIA’s delegation suggested that a homebuyer tax credit - which served decades ago to pull the housing industry out of a similarly severe recession. The Governor suggested that a working group be formed to explore those and other reforms.
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