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Rejoice California Homebuyers and Home Owners – The $729,750 Loan Amount Limit for Conforming and FHA Loans could be coming back. These loan amounts were rolled back to $625,500 few weeks back.
Bloomberg reported – The U.S. Senate adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750.
Senator Robert Menendez, a New Jersey Democrat, offered the increase as an amendment to a spending bill today. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.
If we want to get the economy moving, the housing market has to be part of it, Menendez said tonight on the Senate floor.
The Senate adopted the amendment 60-31. The amendment required 60 votes for approval and was offered during the chamber consideration of a package of spending measures. If the Senate passes the underlying bill, the House would then have to vote for it to become law.
The higher limits, should they be signed into law, would apply until Dec. 31, 2013. There is also a talk of imposing a Mortgage Insurance on these loans of 15 basis points of the unpaid principal balance of the mortgage.
The limits, which vary by locale, apply to loans backed by the FHA and government-controlled mortgage companies Fannie Mae and Freddie Mac, which together buy or guarantee about 90 percent of all residential home loans.
Meanwhile, in a survey of 1,300 agents, the National Association of Realtors found some sellers had to lower their price in markets where mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration are no longer available.
Ten percent of the agents representing buyers said their clients faced higher mortgage rates and 25% needed a larger downpayment because only private mortgages are available in those high-cost markets. (Nearly 80% of the agents in the survey represented homebuyers.)
Some Realtors reported their clients decided to look for a lower-priced home so they could qualify for a government-backed loan. And 8% said their clients gave up their home search entirely.
If the increased loan amount is adopted it will be great news for California Home Buyers, specially San Francisco Bay Area Counties of Santa Clara, Santa Cruz, Alameda, Contra Costa and San Mateo.