This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.
The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008. *To read the extensive provisions of this new bill, please visit the San Diego California real estate blog
The first wave of foreclosures occurred due to the re-setting of some "sub-prime" loans. These loans were predominantly the 80/20 loans that were used to assist buyers to obtain property with no down payment. Later in the cycle of the origination of these loans, the documentation requirements were lessened considerably, so that by 2005, buyers were able to obtain 80/20 loans to purchase property with little- to no-income documentation. Buyers speculated on properties increasing in value and had little regard for the payments. As the loans re-set (usually 2-3 years later), the buyers found themselves unable to make the payments or unable to refinance, and the properties ended up in foreclosure. Here's what we need to understand about these loans: 1. Is that they were spread across the United States (demographic and geographic distribution) and