This week Congress will be debating amendments that will dramatically impact our business here in California – either extending or expiring the current conforming loan limits. Current loan limits are $729,000 max for conforming, with our area being closer to $625,000. If these expire our next max would be back to $425,000. Now $425,000 may sound like a pretty fair loan limit. Folks across the mid-west could buy three median price homes for that amount. But that’s part of what got us into trouble out here to begin with – our median price in Southwest California, as well as much of the state, was well over $500,000 for several years. But if you wanted to buy a median price home, you were forced into a non-conforming or jumbo loan. FHA loans fell to less than 3% of the market in 2006. So people started looking for alternatives to traditional financing.
Viola – sub-prime, Alt-A, exotics.
You’ve probably already heard that B of A is already operating under the new/old loan limits assuming that Congress will let them expire. This means larger, more costly jumbos are back in place for many buyers. You think our move-up and upper end market is dead now? Just wait.
So please take a moment to respond to this Call to Action. This week the Senate will be considering an amendment to the Military Construction Appropriations Bill (don’t ask), to maintain the current loan limits for another year. Both CAR and NAR support this effort. This Call to Action urges our Senators to work to maintain the current loan limits to help fan the flames of the recovery they so desperately need.