Bush administration officials renewed their calls for Congress to pass legislation tightening oversight of Fannie Mae and Freddie Mac Thursday, as Congress signed off on a plan to allow the companies to guarantee or purchase loans that exceed the $417,000 loan limit.
Senate Democrats on Thursday abandoned an attempt at a broad expansion of a $150 billion economic stimulus bill backed by the Bush administration and approved by the House last month.
In an 81-16 vote, the Senate sent a slightly modified version of the bill back to the House, which promptly voted 380-34 to put the bill on the president’s desk.
The White House issued a statement saying President Bush could support the Senate’s more limited amendments, which expand the pool of those eligible for tax rebate checks to include $300 payments to Social Security recipients and disabled veterans.
Bush said the bill “would quickly put money into the hands of the American people and provide our economy the boost it needs” and that he will sign it into law.
The economic stimulus package includes a provision that will temporarily raise the conforming loan limit to allow Fannie and Freddie to purchase or guarantee many jumbo mortgages originated between July 1, 2007, and Dec. 31, 2008.
The increase, to as much as $729,750 in high-cost areas, will also apply to Federal Housing Administration loan guarantee programs. Because the increase will be capped at 125 percent of the median home price for an area, the conforming loan limit will remain at $417,000 in markets where the median home price is $333,600 or less.
Although the increase will expire at the end of the year, industry groups like the National Association of Realtors have urged Congress to mandate a permanent increase in the conforming loan limit in passing legislation to increase oversight of Fannie and Freddie.
Permanent changes to FHA loan limits are being addressed in bills that would also lower minimum down-payment requirements and expand the pool of eligible borrowers by using risk-based pricing. Both the House and Senate have passed FHA modernization bills, but differences between them are being ironed out (see Inman News story).
This is wonderful news for our area, where the $417,000 loan limit didn’t reflect our median home price. This will improve Bay Area housing affordability because conforming loans carry less risk to lenders and result in lower interest rates to consumers.
Survey of Bay Area Counties - Median Prices - Fourth Quarter 2007 County Single-Family Detached Homes Single-Family Attached Homes Q407 Q406 % Change Q407 Q406 % Change Alameda $638,569 $635,101 +1 $376,901 $415,572 -9 Contra Costa $597,736 $639,396 -7 $305,779 $347,796 -12 Marin $1,045,331 $967,286 +8 $663,934 $546,475 +22 Napa $604,500 $610,000 -1 $399,999 $425,000 -6 San Francisco $1,080,335 $970,548 +11 $799,559 $744,420 +7 San Mateo $1,133,184 $998,199 +14 $499,408 $496,812 +1 Santa Clara $942,782 $853,559 +11 $487,846 $438,207 +11 Solano $384,626 $457,415 -16 $234,778 $293,420 -20 Sonoma $521,441 $563,023 -7 $320,242 $349,248 -8 Bay Area $785,058 $735,295 +7 $527,859 $490,554 +8 source: Reuters