House Financial Services Chairman Barney Frank said that president-elect Barack Obama agreed to increase the upper limit on loans that Fannie Mae and Freddie Mac can purchase to $729,750 in high-cost areas. Known as conforming loans, Fannie Mae and Freddie Mac owned loans provide funds to borrowers at the lowest market rates.

The normal limit on borrowers for conforming loans is $417,000 but in expensive markets it was $625,000. The new limit only applies to the real estate markets that fall in the expensive designation, loan limits in all other markets will remain at $417,000. Last year in order to try to stimulate the moribund high end real estate market a temporary limit increase to $729,750 was enacted but that expired December 31, 2008.

The Chief Economist of the National Association of Realtors Lawrence Yun stated, “More people will have access to historically low mortgage rates. Currently the market that’s particularly stalled is on the high end, so this would begin to loosen that market up.” This is definitely good news for potential buyers in the South Bay as well as other expensive housing markets across the country.

Home owners that are facing the prospect of foreclosure also received some potential good news. In order for the Troubled Asset Relief Program to gain access to the remaining $350 billion in funds set aside by Congress they are required to provide at least $50 billion in funding for homeowners facing foreclosure. House Financial Services Chairman Barney Frank released a draft of his bill for the funds today. A final vote on the bill is still pending.

This entry was posted on Friday, January 9th, 2009 at 4:24 pm and is filed under Federal Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.