Conforming & Jumbo Loan Limts For 2008 - MORE Market Chatter

MBA (1/25/2008 ) Sorohan, Mike
The Bush Administration and the House of Representatives yesterday agreed on a $150 billion economic stimulus package that contained key components supported by the Mortgage Bankers Association.

Specifically, the package calls for Federal Housing Administration loan limits to be increased from $362,000 to as much as $729,750. The government-sponsored enterprise conforming loan limit would increase from $417,000 to a maximum of $729,750. And to provide an incentive for lawmakers to work on overall GSE regulatory reform, the loan limit increases for the GSEs are limited to one year.

MBA Chairman Kieran Quinn, CMB, praised Administration and House leaders for their bipartisan approach and quick action, saying the package will help borrowers and stabilize the housing and mortgage markets.

“This stimulus package will bring much-needed help to consumers and restore some stability to the housing and mortgage markets,” Quinn said. “Reform of the Federal Housing Administration has long been a top MBA priority. A more modern and vigorous FHA will provide another option for first time and low and moderate income borrowers and borrowers who need to refinance existing mortgages.”

Quinn said a temporary increase in Fannie Mae and Freddie Mac's loan limits, as well as a boosting of the FHA loan limit, should return liquidity to a portion of the mortgage market that has essentially been at a standstill since August. “This will be especially helpful to current and potential homeowners in areas of the country that have seen the largest price run ups during the recent boom,” he said. “It is not coincidental that many of these areas are the same ones that are now facing the most difficulty.”

In addition to the housing provisions, the package contains tax rebates of up to $1,200 per family and allows businesses to double the amount they can write off for capital investments.

President Bush said he was pleased by the quick action, asserting that while the economy was “structurally sound,” it is dealing with short-term disruptions in the housing market and the impact of higher energy prices.

“This package has the right set of policies and is the right size,” Bush said. “The incentives in this package will lead to higher consumer spending and increased business investment this year. Importantly, this package recognizes that lowering taxes is a powerful and efficient way to help consumers and businesses. I have always believed that allowing people to keep more of their own money and to use it as they see fit is the best way to help our economy grow.”

Not everyone expressed pleasure with the package. Office of Federal Housing Enterprise Oversight Director James Lockhart III said he was “very disappointed” with the proposed increase in the GSE conforming loan limit, calling it a “mistake to do so in the absence of comprehensive GSE regulatory reform.”

“To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools,” Lockhart said.

Ideologists on both end of the political spectrum also found fault with the package, saying that it did too much (conservatives) or not enough (liberals). And Senate leaders indicated that they might add provisions that the House/Administration agreement does not have, such as extension of unemployment and food stamp benefits, which they said would provide a quicker jump-start to the economy.

But House Speaker Nancy Pelosi, D-Calif., who conceded that she was not “totally happy” with the package, nonetheless defended it, calling it the result of compromise and cooperation. She said the Bush Administration made key concessions on the scope of the tax rebates, which cap at $174,000 in 2007 family income.

“Our goals were to provide working Americans who are struggling in these difficult economic times with timely, targeted and temporary relief and to quickly give our economy a shot in the arm. We have accomplished both goals,” Pelosi said. “Economists agree that any stimulus package must put money in the hands of those who will spend it quickly to stimulate the economy, and this bipartisan package does just that.”

Pelosi said the package would go to the full House for a vote next week. The bill would then move to the Senate, where Senate Majority Leader Harry Reid, D-Nev., said the goal was to have a bill on President Bush’s desk by Feb. 15. Depending on what bill the Senate passes—and how the House, Senate and Bush Administration agree on a final package—the bill’s provisions could go into effect this summer. Treasury Secretary Henry Paulson Jr. said the first rebate checks could go out as early as May.

“All these provisions should provide a boost for struggling borrowers and the stalled housing market,” Quinn said. “We are pleased to see that leaders on both sides of the aisle on Capitol Hill have indicated the measure will receive swift action and we look forward to seeing the package signed into law as soon as possible."