On Raising the GSEs' Limits
“This would be absolutely, phenomenally excellent news for home buyers and sellers because it will help so many more people to qualify for loans that they can afford,” said Lori Staehling, president of the San Diego Association of Realtors.And the list goes on.* * *“Because the proposed change would make their houses more affordable to buyers, their houses might sell more quickly and for a higher price,” he [Matt Colonell, mortgage broker with Obispo Mortgage in San Luis Obispo] said.* * *NAR President Richard Gaylord, a RE/MAX broker in Long Beach, Calif., said that raising the loan limit on conventional financing is urgently needed. "The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas," he said. "It is grossly unfair that some Americans do not have access to low-interest rate loans..."* * *The idea behind the higher limits is to stoke demand for homes in high-priced housing markets such as the East Bay and other parts of the Bay Area. "It will be as if interest rates are on sale. You could create urgency..." [said Vickie Nyland, president of the Bay Area division of Taylor Morrison, a homebuilder]* * *“Increasing the conforming loan limit will help homebuyers in the Los Angeles area at no cost to the taxpayer. If local banks can sell the loans they extend to Fannie Mae and Freddie Mac, the interest rates on those loans will be roughly ¼% lower.* * *The proposal would also allow buyers in the market, looking to finance a property with a loan of $729,950 or less, to make the purchase more affordable than it otherwise would have been under the current law.* * *Leslie Appleton-Young, chief economist for CAR, said decreases in the statewide median prices seen in recent months were the result of difficulties in obtaining jumbo loans.
[California governor] Schwarzenegger maintains that moderate- and low-income families in high-cost housing markets are "hit hardest" by the conforming loan limit, because it restricts their access to lower-cost, lower-down-payment, fixed-rate loans. "Lifting the GSE loan limit ... would help put affordable home purchase and refinancing options within their reach," the governor said...* * *The proposed new limit for mortgages with the most attractive interest rates would be, for costly markets such as the Bay Area...
"The changes would offer the stability needed to offer more home loan products," said Terry Francisco, a Bank of America spokesman. "If we and other lenders can offer more products, that will increase competition..."
So according to the real estate industry, the current "problem" with the housing market is a lack of affordable loans, not a lack of affordable house prices. As if a self-serving redefinition of affordability wasn't enough. We again need more "affordability products".
I cannot help but laugh at the depravity of the real estate industry and its political lackeys. So we are now back to the "affordability loan" thing. Clearly, the NAR, the CAR, and real estate agents have not learned a damn thing by the carnage they have helped to create all in the name of their 6% commission. Clearly, they have no qualms (moral or otherwise) about using the devastation currently being suffered by the hoards of "FBs" (which they helped to create) to push a feckless and foolhardy policy that they have been lusting after for many, many years; the real estate industry has no scruples over trying to re-inflate the housing bubble for just a little while longer even if it means extending the pool of FBs. Apparently, all that matters to them is the 6% commission; the people they claim to serve can all go to hell.
If this futile proposal to raise the conforming loan limit becomes law (and we all know it will be permanent) and when the inevitable backlash arrives, when the legion of FBs finally realize that the real estate industry's attempt to keep their dream of easy real estate riches alive was nothing more than a shameful attempt to continue to line their pockets at the expense of buyers for just a little longer, you, Mr. and Mrs. Real Estate Industry, will be "reminded" of your support. The collaborators will be named. The law suits will fly. A lot of eyes are watching, a lot of blogs are recording what you say and what you do. You can't hide. The tar and feathers are waiting for you.
Using people's current suffering to make a desperate, last minute, and short-sighted attempt at re-fueling unsustainable and unaffordable house prices via GSE loan limit increases is plain and simply wrong.
Do the right thing: Let the housing markets correct and heal themselves.
But then again, now that the NAR has gotten its way and Fannie Mae has changed its mission from helping poor and middle class families buy homes to helping mortgage bankers and lenders make money, why am I surprised? Sick. Just sick.