How New FHA, GSE Loan Limits Impact You

Few posts ago, I have mention that new limit is coming....so, now, when it is here, how is it impacting you?

Last week, President Bush signed into law a $152 billion economic stimulus bill that includes temporary increases in loan limits for the government sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac — and the Federal Housing Administration until Dec. 31. But what does this mean for you?

The NATIONAL ASSOCIATION OF REALTORS® launched a new resource Web page, http://www.realtor.org/gapublic.nsf/pages/economic_stimulus devoted to educating you about the new loan limits, which loans are eligible, and the implementation of these temporary limit increases.

NAR has developed estimates of the FHA and GSE single-family loan limits (http://www.realtor.org/GAPublic.nsf/files/new_loan_limits.pdf/$FILE/new_loan_limits.pdf) by state and county so that you can get a sense of how the loan limits will rise in your markets. As you can see, Nevada, for instance, is mentioned, but nothing was done for Las Vegas. However, Salt Lake City is there: FHA limit used to be $362,790, now it is $546,875 and same for GSE limit. Other effected Utah cities are Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, San Juan, Sanpete, Sevier, Summit, Tooele (same before anf after numbers as SLC), Uitah, Utah, Wasatch, Washington, Wayne, Weber. As you see some cities are missing?

"The importance of immediately implementing the new limits cannot be overstated," said NAR President Richard Gaylord last week in a public statement. "Mortgage markets throughout the country need liquidity. Our research indicates that the increased FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their homes.”

The FHA limit will increase to as much as $729,750 in high cost areas (to 125 percent of local median home prices). The GSE limit will jump to $729,750 for loans; currently Fannie Mae and Freddie Mac loans are capped at $417,000. So, when you hear and see these numbers, please know it is not about all of us.

Eligible loans from FHA include mortgages that were issued for credit approval on or before Dec. 31, 2008. GSE loans that are eligible include loans that originated after July 1, 2007 to Dec. 31, 2008.

The U.S. Department of Housing and Urban Development is required to publish the new mortgage limits by March 14; the limits will be effective for FHA immediately upon publication.
"This will be a major stimulus for the housing industry and for people who want to own a home,” Gaylord said.

Fed Cuts Interest Rate a Quarter Point

WASHINGTON (AP) - The Federal Reserve cut a key interest rate by one-quarter of a percentage point Tuesday, trying to keep the country out of recession.
The reduction in the federal funds rate to 4.25 percent marked the third rate cut in the past three months. Fed officials signaled that further cuts were possible if a severe downturn in housing and a crisis in mortgage lending get worse.
Commercial banks were expected to quickly match the latest reduction by trimming their prime lending rate, which would reduce this benchmark rate for millions of consumer and business loans to 7.25 percent.
The Fed started cutting rates in September with a bolder-than-expected half-point move and then reduced the funds rate by a quarter-point at its Oct. 31 meeting. The central bank was trying to make sure that a severe slump in housing, spreading mortgage defaults and financial market turbulence which hit with force in August did not derail the economy.
Fed Chairman Ben Bernanke and his colleagues began their final meeting of 2007 behind closed doors Tuesday morning. Wall Street investors traded cautiously as they awaited the announcement.

read more on http://apnews.myway.com//article/20071211/D8TFEGE81.html