Reducing mortgage limits

[Wiseacre]

On Oct 1, the ceiling for gov't backed mortages by Fannie, Freddie, and the FHA will be lowered, unless the Congress blocks that action. The upper limit will vary by location, but in the expensive areas like NY and CA, we're talking about dropping from $729,750 to $625,500. So who wants to block the change? Uhuh, democrats from NY and CA, although the WH does support the change. No doubt some repubs too, from the super rich areas of the country.

But many repubs see it as a way to reduce the mortgage market's dependence on gov't support, and so far it looks like the change will take effect despite intense lobbying from real estate groups.

Somebody correct me if I'm wrong, wasn't Obama's Jobs Bill (pass it now!) supposed to be paid for in part by taking away tax deductions such as this? When it goes down in flames I wonder if he'll blame it just on the repubs and forget to mention that some dems wouldn't go along either.

 

[Moonglow]

probably so.

 

[8537]

I must be missing something: Where do limits on the max value of loans the GSE's will purchase relate to a tax deduction?

 

[Wiseacre]

I must be missing something: Where do limits on the max value of loans the GSE's will purchase relate to a tax deduction?

You don't find it odd that some democrats want to help rich guys get bigger mortgage loans from the gov't while at the same time the Obama admin wants to eliminate their mortgage interest deduction?

 

[bitterlyclingin]

With work, "The task always expands to the time allotted"

The same in markets. The market price will always rise to the subsidized price, which in this case will be whatever the GSE's will guarantee. A lot of the legislators recognize that in certain areas their constituents will get hurt as a result.

During the Fed's periodic meetings, these 'hoi polloi' bankers don't spend all of their time cloistered around the punch bowl, imbibing its contents, discussing the latest in 'haute couture' cigars or their latest 200 foot yacht acquisition, they do spend some time reading the economic activity reports from the local Fed Regional Banks. One of the things that does catch the Feds attention in these reports is when an undeveloped piece of property, for instance in Phoenix, changes hands three times in three months, each time for some twenty to fifty thousand dollars more than the previous sale, with no physical improvements having taken place. The Fed will then send out a directive to the regional banks which works downward to the local banks to rein in their appraisers. Most real estate appraisals are nothing more than market familiar individuals looking at a property, wetting their forefinger, projecting that dampened forefinger skyward and determining a price based on which side of the finger feels colder dependant on the direction of the breeze. When appraisal values go down, the bank refuses to lend more than the appraised value, the buyer walks. or comes up with the additional purchase monies. The Feds and the insured bank's risks decrease, since the banks end up lending less money, putting fewer taxpayor dollars at risk should the Fed have to seize the bank and reimburse the depositors.

 

[Wiseacre]

I wish the govt would get out of the housing business altogether, and let the market do it's thing. It's a good thing to make sure nobody is discriminated against, but it's another to be setting loan limits or conditions, and trying to put people into a house they can't realistically qualify for.