Within the new stimulus package is an attempt to raise the limit on loans Fannie and Freddie can buy. Good idea? No way! Fortunately, with all the massive fraud going on around the country during the speculative run up, a significant portion of the toxic waste was held by lenders like New Century and over a hundred other lenders that went bust. The losers there were the shareholders of those public companies.
What happens when FNM and FRE take on this toxic waste and a new round of unchecked fraud and massive speculation begins? This time the bag holders will be the taxpayers of the United States! You might want to save your $600 check so you can send it back when the bill comes due for the bankruptcy of FNM and FRE.
WSJ.com
One important provision temporarily raises the dollar limit on mortgages that can be bought or guaranteed by government-sponsored mortgage giants Fannie Mae and Freddie Mac. The current limit of $417,000 would rise above $600,000 and perhaps as high as $730,000 in the most expensive areas, congressional leaders said.
5 comments:
Jacking up the conforming will obviously allow a certain number of re-fi's that would otherwise not make sense at the higher rate.
How many?
No idea.
Yup, yet another attempt to re-inflate the deflating real estate bubble. Clearly, the gevernment sides with the homedebtor and REIC members.
What a scam, trying to prop up a faux bubble economy, offering a nice get-out-of-jail free gift to FBs, from the gov't....
The govt cannot try prop this economy up. They need to let it run its course. They just prolong the inevitable. And increasing the borrowing limits does nothing to increase the ability to repay he loan.
Having had an FHA loan I know that getting an FHA loan is a far harder thing to do than committing fraud on a conventional. There is an argument to be made that if the increasing the conforming numbers 4 years ago would have saved a lot of headaches now. At the very least the gov't would be holding the repo's and not the financials.
I agree with the others... This economy has serious fundamental structural problems. e.g. the negative savings rate. etc... the default rate on credit cards is going up now to...
I hate to say it but I think we NEED some inflation.
You people obviously live in Bakersfield or an area with a median home price under the conforming limit.
The conforming loan limit does not make sense. It really should be relative to the area you live in. For myself, living in California, the limit seems unfair given the median home price. Now if I were living in another area of the U.S. where the median home price is 250K then if wouldn’t be an issue.
The problem I see is there are more Rep’s from states with median home price under the current conforming loan limit than above the current limit. I mean why would they care? I just don’t see these people backing this initiative.
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