Thursday, January 24, 2008

Conforming Loan Limit

This is, I think, a very bad idea. While it's true that entry-level property prices are much higher in certain parts of the country, that's largely due to the fact that the housing bubble was much bigger than in the rest of the country. Prices need to come down, and this will prop them up.


I'd be okay with it if lending standards were raised substantially - such as 20% down - for people to qualify. otherwise....


...adding, the issue is how big of a loan Fannie and Freddie are allowed to take off the hands of lenders. Right now the limit is at $417K, which isn't a lot in high cost areas. The practical effect is that loans above this limit, "jumbos," go for a point or point and a half higher than loans under this limit.


...supposedly "the deal" has this limit going up over $700K in high cost areas. Pumping some more helium into the bubble...