The Economic Stimulus Plan

Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000.

On February 13, President Bush signed into law the "Recovery Rebates and Economic Stimulus for the American People Act" (H.R. 5140) that passed both the Senate and House on February 7. The bill includes temporary increases on the size of loans eligible for purchase by the government sponsored enterprises (Fannie Mae and Freddie Mac) and for insurance by the Federal Housing Administration (“FHA”).

The size of loans that can be guaranteed by Freddie Mac and Fannie Mae was raised to $793,000 by the Office of Federal Housing Enterprise Oversight. The new, higher loan limits will stay in effect through the end of the year, allowing the government sponsored enterprises (GSEs), to buy much higher-priced mortgages in some areas of the country.

Also, the size of the loans that the Federal Housing Authority (FHA) can insure was raised to $729,000 by Housing and Urban Development (HUD).

HUD HAS 30 DAYS from the day the President signed the package into law TO IDENTIFY THE IMPACTED MSAS. We expect the impacted areas to be announced simultaneously in mid-March to all mortgage lenders. We have been given the date of March 17th by several lenders for the new limit to be implemented.

Because of the changes during the past 12-months in the mortgage industry, the median area sales prices may be dramatically different throughout the year. Thus, the timeframe used by HUD to determine the higher loan limits was a key component to determination of new loan limits.

Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets. By making it easier for buyers to get loans, regulators hope to get these markets moving again.
The new loan limits affect 71 metropolitan areas, as well as 21 counties outside of those metro areas.

Please let me know if you have any questions on the new conforming loan limits or any other mortgage related matter. As always, I am here to assist you in all of your mortgage needs by providing personalized service to each of my clients.

Sincerely,
Susan Wallace
Carteret Mortgage
Susan@Susan-W.com