Today Pelosi and Paulson announced bits and pieces of the Economic Stimulus Plan which includes temporarily increasing the conforming loan limit (currently $417,000) and FHA’s loan limits (vary by county).
Here’s what I understand so far:
- Loan limits would last until December 31, 2008.
- Both Conforming and FHA loan limits would be based on 125% of the local median home prices up to $730,000 (this is according to CNBC).
- It’s also reported that both loan limits may be increased to $625,000.
This is expected to be approved by Bush very quickly…stay tuned!
Update January 24, 2008 2:00 p.m.
I just received this memo:
For Immediate Release
January 24, 2008
We are very disappointed in the proposal to increase the conforming loan limit as we believe it is 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.
Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.