Fannie Mae Supersizes You
Last week Fannie Mae and Freddie Mac made it easier for buyers in high-priced areas like New York to get big loans or re-fi their existing ones. Limits for federally backed loans in 70 counties across the U.S. have now been raised to $729,750, according to an article in the Wall Street Journal. The move…
Last week Fannie Mae and Freddie Mac made it easier for buyers in high-priced areas like New York to get big loans or re-fi their existing ones. Limits for federally backed loans in 70 counties across the U.S. have now been raised to $729,750, according to an article in the Wall Street Journal. The move is supposed to encourage lenders to to drop rates on jumbo loans (those over $417,000), which have soared above smaller loan amounts in the wake of the credit crunch. The loan-limit increase, however, will be short-lived: It’s set to expire at the end of this year. Still, this should do more to prop up the economy than tax rebate checks.
Fannie, Freddie Loan Limits Raised [WSJ]
Photo by *andrew.
This will not make a difference. You are in the end-game stage of this Mutant Real Estate Bubble.
The parallels to today and the Great Depression are the same.
The What
Someday this war is gonna end….
BTW The tin-foil hat guys are looking right.
The government already stepped all over the free market with the mortgage deduction and by buying mortgages in the first place.
I’m about to close and my mortgage broker said none of the banks are offering this new ceiling. Nobody knows anything, everyone’s confused. He thinks it might take weeks for this to become reality. Meanwhile the interest rates fluctuate like crazy by the week because the banks are panicking instead thinking straight.
This is 10:42 again.
Let’s call this what it is … a transfer payment from all taxpayers to semi-wealthy real estate owners on the coasts (in the form of lower interest rates).
Is the government steeping into “free markets” to artificially lower interest rates on jumbos on a temporary basis? Yes, they are.
Who’s paying for it? All taxpayers if Fannie Mae and Freddie Mac need additional government-subsidized capital or a full bail-out.
BUT … I earn too much to get any cash from Bush’s rebate check stimulus plan SO you better believe I’m going to go after a free handout from Uncle Sam if he’s offering it.
Do I NEED the capital at a cheaper cost to stop a foreclosure … of course not … but I’d be foolish to not take advantage of it, refi and save $10k a year!
11:52 OK, I stand corrected. Based on the 2005 figures, the percentage of NYC households that earn $200K or more is…3.4%
Let’s say it’s up to a whopping 4% today. That still makes those people rich. Oh, I know, not hedge fund geniuses rich, but rich nevertheless.
From Office of Federal Housing Enterprise Oversight (OFHEO):
The temp new loan limit applies to loans originated from 7/1/2007 to 12/31/2008. If you got one before 7/1/07, you are NOT eligible to refinance.
http://www.ofheo.gov/media/hpi/AREA_LIST.pdf
We shouldn’t be subsidizing homebuyers at all — the mortgage tax break is bad public policy to begin with. Expanding guaranteed insurance on mortgages just compounds the problem. The government shouldn’t be in the business of encouraging one economic decision over another — if homeowning is really so much better than renting, and as everyone on this site seems to believe, so much more sensible economically, then I shouldn’t have my tax dollars going to prop homeowners up.
11:35 – For the same reasons always spouted by people on this blog of why people shouldn’t cry when they get priced out of their neighborhoods – This is NYC and there is a premium to live here. If you can’t afford the premium go back to Cleveland.
2000 census? Thats not pertinent is it. Try 2005.
http://www.newsday.com/business/realestate/ny-census-nycincome,0,7242836.htmlstory
There are plenty of households with income in excess of 150,000