Dennis Norman
As if the fragile housing market didn’t already have enough deadlines to be concerned about, namely the home-buyer tax credit that has been a much-needed shot in the arm to the housing market and is set to expire November 30th, now there’s another deadline looming on the horizon: The American Recovery and Reinvestment Act of 2009 temporarily increased the maximum loan limits for loans insured by Freddie Mac, Fannie Mae and FHA in an effort to help stimulate the housing market by assuring there was an abundance of affordable financing available for buyers, and unless Congress takes action these temporary limits go away at the end of this year and revert back to the normal loan limits.
Today, the Mortgage Bankers Association (MBA), along with the National Association of Realtors (NAR) and the National Association of Homebuilders (NAHB) sent a letter to House Speaker Pelosi, Housing Minority Leader Boehner, Senate Majority Leader Reid and Senate Minority Leader McConnell calling for an extension of the current loan limits for Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).
The letter explains that “even thought the temporary limits do not expire until the end of this year, obtaining financing is already becoming more difficult and expensive for many borrowers.” The letter states that the impending expiration of the higher loan limits is already having an impact on borrowers in the following ways:
- Some lenders have stopped underwriting certain loans at the current interest rate because lenders are uncertain whether they will be able to sell the loans, and are unable or unwilling to retain them in their own portfolios. The result is that borrowers are being unnecessarily denied financing because of uncertainty about expiring loan limits.
- Consumers cannot lock in current interest rates beyond 60 days for loans over $625,500. As a result, loans that do not close before year-end will need to be re-underwritten and possibly then declined because of the higher interest rate and resulting mortgage payment.
- Routine activities like mortgage pre-approvals or home purchase contracts are being complicated by the loan limit uncertainty, making shopping difficult for would-be home-buyers
The letter closes urging Congress to take action so that the GSE’s and FHA can be permitted to continue providing capital to support loans to families across America.
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[...] the National Association of Realtors sent congressional leaders a letter asking for extensions. Upcoming Expiration of Increased Loan Limits for GSE’s and FHA already impacting buyers – realestateindustrynews.com 10/26/2009 Dennis Norman As if the fragile housing market [...]