“A proposal to provide a $15,000 tax credit to homebuyers was stripped from a $789 billion economic stimulus package that appears headed for a vote Friday, but a restoration of higher loan limits for Fannie Mae, Freddie Mac and FHA loan guarantee programs appears to have made the cut.”
“According to a summary of the compromise bill released by lawmakers Thursday, the tax credit will still be available only to first-time homebuyers — those who haven’t owned a principal residence in the last three years. But they won’t have to pay it back, as is currently the case, and the credit will be increased to $8,000 and be available through the end of November.”
“[NAR President Charles McMillan] said the bill will also reinstate the $729,750 loan limit in high-cost areas for Fannie Mae, Freddie Mac and FHA loan guarantee programs that was in place throughout much of 2008…”
$15,000 homebuyer credit cut in compromise [Inman]
Proposed $15,000 Homebuyer Tax Credit Clears The U.S. Senate [SocketSite]
The American Recovery And Reinvestment Act Of 2009: Summary (pdf) [senate.gov]
Jumbo-Conforming Loans Going, Going, And Almost Gone [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by gowiththeflow

    This is a saving grace to those in my boat.. got in on the 729k last year… rates have dropped but could not get back in with the lower int rates without moving the difference between the 625k and 729k to a much higher cost second. Finally, finally I feel like I may get a bit of the stimulus pie as I dont qual any other way. This in my opin will also help the props 729k to around 1mil or a bit more as they can do the 729k and put the small left over on a 2nd.
    Let’s hope the rates stay put or drop lower now.

  2. Posted by rinconhillbilly

    Boohoo!!

  3. Posted by gowiththeflow

    You ok rinconhillbilly?

  4. Posted by badlydrawnbear

    So as medians fall, meaning the 417k limit should be coming down except that special legislation was passed a few years ago to ensure that the conforming loan limit could only increase (never decrease), and banks just start getting back to factoring in risk the Federal government decides to encourage banks to take MORE risk in high cost areas, like Manhattan and SF, which just happen to be the EXACT segments of the market that is currently being crushed?
    Grrrrreat.

  5. Posted by Chart Lover

    …special legislation was passed a few years ago…
    “Nothing is so permanent as a temporary government program. ” – Milton Friedman

  6. Posted by rejected and dejected

    badlydrawnbear, there is some real retrenchment afoot in the loan markets today. I was rejected for a refi just this month despite the fact that I have “excellent” credit (800+), can pay the balance in cash without selling any assets, am asking for a 35% LTV, and can easily make the loan payment within the strictest Debt to Income guidelines.
    Why? The loan company didn’t ant to touch it because there’s commercial in the building, too, and they’re afraid that FNMA wouldn’t buy it.
    And this is from one of the biggest lenders in the nation.
    If they won’t lend to me under the circumstances above, who will they lend to? And does that signal a need to force a loosening, since the over-reactive tightening is creating an artificial constraint on the money supply, which is in fact having a demonstrable negative impact on the consumer economy? (I know that at least half of the refi savings I had would have turned into purchases)

  7. Posted by SF Loser

    I’d be hesitant to lend in SF without 50% down at the moment.

  8. Posted by exsf

    You are all nuts! of course the banks will not lend, would you lend money to anybody right now with all the risk flying around? would you lend money to anybody with a collateral asset that is depreciating? (in a nosedive in most places). The banks are being smart and staying put (not to mention that they themselves are borderline insolvent so taking on more risk is not a good idea). The politicians are living on another dimension or drinking some hallucinogenic. And people looking at the politicians to solve their problems are out of their minds, any short-term solution to this coming from Washington will have profound negative long-term effects. The solution is to let the prices drop as far as they need to go, and for people to batten down the hatches, save money, be frugal, and wait for the storm to pass.

  9. Posted by SFhighrise

    Does anyone know if this also means that the limit for FHA loans will temporarily rise to $729k? I know that they currently match the conforming limit of $625k. A FHA loan will be our only option, since we can’t come up with 10% down. I am wondering if I may have a situation where I can do a $700k mortgage with a FHA loan, with 3% down and gather conforming rates? Any thoughts would be greatly appreciated.

  10. Posted by phatty

    Anyone know if the 8k applies only to primary residences? I rent here in SF and will continue to do so while the market is tanking; but could I purchase a place somewhere else and still get the credit even though I wouldn’t be living there full-time?

  11. Posted by SomaSoldier

    I looked through the bill summary and couldn’t find any reference to the NAR president’s assertion about the $729K limit being reinstated. If it became a reality, it will help a lot of people in the Bay Area as long as the rates are attractive; they really weren’t before the limit expired last year.

  12. Posted by Trip

    It’s pretty buried in the bill. It looks like its in sec. 1203 (for loans taken in 2009 only):
    For mortgages originated during calendar year 2009, if the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation determined under section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.B.C. 1717(b)(2) or section 305(a)(2)
    8 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1754(a)(2», respectively, for any size residence for any area is less than such maximum original principal obligation limitation that was in effect for such size residence for such area for 2008 pursuant to section 201 of the Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 619), notwithstanding any other provision of law, the limitation on the maximum original principal obligation of a mortgage for such Association and Corporation for such size residence for such area shall be such maximum limitation in effect for such size residence for such area for 2008.

  13. Posted by SFRaj

    I will agree with most of what SFLoser said. About 6.9% of prime “jumbo” loans were at least 90 days delinquent, and rising. The rate was up sharply from 2.6% a year earlier. The part I don’t agree with is that the govt can’t do anything in the short-term. I love Obama, but can’t figure our why Mr. Bernanke or Mr. Paulson are still envolved. How can the primary factors that were envolved in creating mess be expected to fix it?

  14. Posted by JonC

    @SFRaj:
    Good question! How can “the primary factors that we involved … expected to fix it?”. I assume you are speaking about Bernanke and/or Paulson.
    Don’t you realize that Obama doesn’t have clean hands with respect to this mess;
    Taken From:
    http://michellemalkin.com/2008/06/25/the-acorn-obama-knows/
    Under the guise of “consumer advocacy,” ACORN has lined its pockets. The Department of Housing and Urban Development funds hundreds, if not thousands, of left-wing “anti-poverty” groups across the country led by ACORN. Last October, HUD announced more than $44 million in new housing counseling grants to over 400 state and local efforts. The White House has increased funding for housing counseling by 150 percent since taking office in 2001, despite the role most of these recipients play as activist satellites of the Democratic Party. The AARP scored nearly $400,000 for training; the National Council of La Raza (”The Race”) scooped up more than $1.3 million; the National Urban League raked in nearly $1 million; and the ACORN Housing Corporation received more than $1.6 million.
    As the Consumer Rights League points out in its new expose, the ACORN Housing Corporation has worked to obtain mortgages for illegal aliens in partnership with Citibank. It relies on undocumented income, “under the table” money, which may not be reported to the Internal Revenue Service. Moreover, the group’s “financial justice” operations attack lenders for “exotic” loans, while recommending 10-year interest-only loans (which deny equity to the buyer) and risky reverse mortgages. Whistleblower documents reveal internal discussions among the group that blur the lines between its tax-exempt housing work and its aggressive electioneering activities. The group appears to shake down corporate interests with relentless PR attacks, and then enters “no lobby” agreements with targeted corporations after receiving payment.
    Don’t bother asking Barack Obama. He cut his ideological teeth working with ACORN as a “community organizer” and legal representative. Naturally, ACORN’s political action committee has warmly endorsed his presidential candidacy. According to ACORN, Obama trained its Chicago members in leadership seminars; in turn, ACORN volunteers worked on his campaigns. Obama also sat on the boards of the Woods Fund and Joyce Foundation, both of which poured money into ACORN’s coffers. ACORN head Maude Hurd gushes that Obama is the candidate who “best understands and can affect change on the issues ACORN cares about” — like ensuring their massive pipeline to your hard-earned money.

  15. Posted by JonC

    @SFRaj:
    Good question! How can “the primary factors that we involved … expected to fix it?”. I assume you are speaking about Bernanke and/or Paulson.
    Don’t you realize that Obama doesn’t have clean hands with respect to this mess;
    Taken From:
    http://michellemalkin.com/2008/06/25/the-acorn-obama-knows/
    Under the guise of “consumer advocacy,” ACORN has lined its pockets. The Department of Housing and Urban Development funds hundreds, if not thousands, of left-wing “anti-poverty” groups across the country led by ACORN. Last October, HUD announced more than $44 million in new housing counseling grants to over 400 state and local efforts. The White House has increased funding for housing counseling by 150 percent since taking office in 2001, despite the role most of these recipients play as activist satellites of the Democratic Party. The AARP scored nearly $400,000 for training; the National Council of La Raza (”The Race”) scooped up more than $1.3 million; the National Urban League raked in nearly $1 million; and the ACORN Housing Corporation received more than $1.6 million.
    As the Consumer Rights League points out in its new expose, the ACORN Housing Corporation has worked to obtain mortgages for illegal aliens in partnership with Citibank. It relies on undocumented income, “under the table” money, which may not be reported to the Internal Revenue Service. Moreover, the group’s “financial justice” operations attack lenders for “exotic” loans, while recommending 10-year interest-only loans (which deny equity to the buyer) and risky reverse mortgages. Whistleblower documents reveal internal discussions among the group that blur the lines between its tax-exempt housing work and its aggressive electioneering activities. The group appears to shake down corporate interests with relentless PR attacks, and then enters “no lobby” agreements with targeted corporations after receiving payment.
    Don’t bother asking Barack Obama. He cut his ideological teeth working with ACORN as a “community organizer” and legal representative. Naturally, ACORN’s political action committee has warmly endorsed his presidential candidacy. According to ACORN, Obama trained its Chicago members in leadership seminars; in turn, ACORN volunteers worked on his campaigns. Obama also sat on the boards of the Woods Fund and Joyce Foundation, both of which poured money into ACORN’s coffers. ACORN head Maude Hurd gushes that Obama is the candidate who “best understands and can affect change on the issues ACORN cares about” — like ensuring their massive pipeline to your hard-earned money.

  16. Posted by wanker

    Wow. Such insightful comment, JonC, quoted from the notable scholar/journalist michelle malkin.
    Any rush or hannity quotes you can reference as well — you know — for “balance”.

  17. Posted by NoeValleyJim

    Yes, I think it is strange that Foolio is getting edited, but these cut and paste rants (double posted even!) from places like Michelle Malkin and World Net Daily are left up. I guess I just hope that the editor is off skiiing or something.

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