We're Too Special for Bail-Outs
If there are to be mortgage bail-outs, it looks like the Bay Area won't get much or any of it; the Bay Area is just too special. But that's okay. I mean, who wants to be "bailed out" and trapped in their house when their house is worth less than their mortgage? Sometimes it is better to just jump ship and swim to shore than to be handed a designer life preserver while locked in your cabin.
Fannie Mae and Freddie Mac pledged at least $20 billion to help homeowners caught in the subprime meltdown, but those in the Bay Area could be left out.
The loan limit on government-sponsored enterprise loans for single-family homes in California is $417,000. The Bay Area’s median home price in March was $639,000, according to DataQuick.
Since the loan caps are made by the federal government, there’s little Fannie Mae or Freddie Mac can do, said Fannie Mae spokesman Alfred King. ‘It’s going to be tough in some areas like yours,’ King said.
‘It’s cruelly cosmetic for California,’ said Ed Leamer, director of the University of California, Los Angeles Anderson Forecast. ‘It’s just restructuring, not debt forgiveness.’ Leamer said that even $40 billion is too small to make a difference.