Economic Stimulus Package to Be Signed Into Law

 How will it affect Freddie, Fannie, FHA & You

             President Bush is set to sign a $152 billion economic stimulus package into law this week. The bill will provide tax rebates of $600 for individuals (earning under $75,000) or $1,200 for couples (earning under $150,000), plus $300 for each child. Lower income people, including retirees on Social Security and disabled veterans who pay no income taxes, would receive checks of $300.

             Also included in the bill and of more importance in regards to the real estate market are temporary raises to the conforming loan limits, that will allow Fannie Mae, Freddie Mac and the Federal Housing Administration to temporarily raise the conforming loan limits to as high as $729,750.

             However, when looking at those numbers you must consider a few things. First and foremost, when looking at loans insured by Fannie Mae and Freddie Mac, the only areas that will be affected, will be high cost Metropolitan areas. As the caveat will be the conforming loan limits will be the higher of a Metropolitan area's current conforming loan limit ($417,000 currently) or 125% of the median home price. While Fannie and Freddie will have 30 days to establish the areas that will be affected and with home prices in constant flux, economic numbers indicate we are sitting somewhere near $262,750 for Maricopa County and $202,400 for Pinal County. Both well below the threshold needed to raise the conforming loan limits. So it appears we will not see any conforming loan limits raised in our local area.

           On the other hand, the loan limit on FHA loans locally may increase with this new bill. As the current loan limits for both Maricopa and Pinal County sit at $263,150. Now, once again, the Federal Housing Administration will have to go through due diligence to decide what values they will use, however we could see a move in FHA loan limits as high as $328,000 within the next thirty days. While this wouldn't be a major move overall for the local Phoenix real estate market, it will help some home buyers obtain financing and other homeowner's with higher loan balances to refinance into an FHA mortgage.

                                                                 02/26/2008