INCREASED LOAN LIMIT CRACKS OPEN OLD DEBATE.Byline: Gregory J. Wilcox Staff Writer Fannie Mae Fannie Mae: see Federal National Mortgage Association. and Freddie Mac Freddie Mac: see Federal Home Loan Mortgage Corporation. , the two big federally chartered financial institutions, on Tuesday increased their conforming loan Conforming Loan A conventional mortgage under $203,150 that conforms to the loan amounts and mortgage guidelines used by Fannie Mae and/or Freddie Mac. Notes: Conventional mortgages or conforming loans are classified as non-conforming or jumbo loans when the amount of the limit by 3.4 percent to $333,700 for next year. Fannie Mae estimates that the higher allocation for a traditional 30-year fixed loan will open the housing market to about 95,000 homebuyers, but the California Association of Realtors estimates only 4,100 of those families live in California. ``While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to improve homeownership opportunities in California,'' association President Ann Pettijohn said in a statement. The loan limits are based on the annual change during October of the nation's average housing price. This year it rose 3.4 percent to $243,756 from $235,717 in October 2002. Current law recognizes high-cost states and their need for an increased conforming loan limit, which is 50 percent higher, but this applies only to Hawaii, Alaska, Guam and the Virgin Islands. However, in California the median price - typically a lower number than an average price - jumped 17.4 percent to $381,200. And in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County it soared 23.4 percent to $369,369. The statewide median is 14 percent higher than the loan limit, which means buyers are often pushed into more expensive jumbo loans Jumbo Loan Any residential or commercial mortgage with a loan amount exceeding the guidelines of Fannie Mae and Freddie Mac. Notes: Rates tend to be slightly higher on jumbo loans because lenders generally have a higher risk. . And California has 14 counties where the median housing price is above the loan limit. The association believes that the limits should more accurately reflect the economic climate. ``We're what many would call a high-cost state compared to many other states across the country,'' said Robert Kleinhenz, the association's deputy chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the . The association is supporting HR3507, sponsored by Congressman Brad Sherman Bradley J. "Brad" Sherman (born October 24 1954) is an American politician. He has been a Democratic member of the United States House of Representatives since 1997, representing California's At-large congressional district. , D-Sherman Oaks, that would expand the high-cost provision to include states like California. Officials of Fannie Mae and Freddie Mac could not be reached for comment Tuesday. But Fannie Mae Chairman and Chief Executive Officer Franklin D. Raines said in a statement that the new limit will save some consumers money. ``Interest rates are significantly lower on conforming mortgages than on jumbo mortgages In the United States, a jumbo mortgage is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits. This standard is set by the two largest secondary market lenders, Fannie Mae and Freddie Mac. . By obtaining a mortgage that Fannie Mae is eligible to buy, in 2004, as many as 95,000 home buyers could save up to $21,900 over the life of a 30-year mortgage,'' the statement read. Gregory J. Wilcox, (818) 713-3743 greg.wilcox(at)dailynews.com |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion