Dennis' Mortgage Blog

Last night in his State of the Union message President Bush asked Congress to quickly pass the economic stimulus bill--and not to add any pork or earmarks to the bill.  The bill quickly passed through the House last week but has been kicked around the Senate and its committees since then.  Last night Bush stated he would veto the bill if the Senate and/or House layered on more spending to the bill.

Integral to our industry is language in the bill that would raise the loan limits for conforming (FannieMae and FreddieMac) and FHA mortgages considerably.  Depending on whose math you use Southern California as a "high cost" area could see conforming loan limits raise from the current $417,000 for single family properties to as high as $715,000, more likely would be somewhere around the $650,000 but it depends on what trading occurs in the Senate and then in the Joint Committee meeting with the House for the final version of the bill to be sent to the White House for the President's signature.  Again depending on the math and formulas used we may see FHA climb as high as $625,000 but again probably closer to the $475-525,000 range.

These increases in loan limits would assist the housing markets considerably as lower rates and easier qualifying would allow thousands of homeowners currently in ARMs or fixed-to-adjustable mortgages to refinance their homes to fixed rate mortgages and greatly expand the number of qualified buyers for homes within 20% the regions median priced homes.

Given that the Democrats only have one more year to pile on President Bush and that they control the Senate the cynic in me sees the stimulus package as a perfect opportunity for them to try to tweak Bush one more time.  Challenging the President by adding pork and earmarks to the bill to see if he will veto the legislation, Senate Democrats (two of whose members are running for Bush's job) may want to take the veto out to the public and the voters as a campaign issue.  "Bush vetoed legislation we passed to help you..."  I never understood politicians who run their campaigns against an incumbent who will not be in the race, i.e. a termed out President, but they seem to think it effective.

Ideally the Senate will pass untouched and unmarked the House version of the stimulus package that went through in almost record speed--but we'll see if expediency or politics has greater priority for those voting.  Not that I am enamored with most of the package--I think rebate checks are a waste of tax payers' money and we would be better off with cuts in the tax rate--but if I must swallow the bitter with the sweet then swallow I must as like many mortgage professionals across the country I have clients who really need higher loan limits.

Call or write your Senators today to tell them to pass the package!

Dennis

Tuesday, January 29, 2008