Raising the Limits

President Obama is expected to sign a resolution passed late yesterday by Congress extending the current limits for Fannie Mae, Freddie Mac, and FHA loans through 2010. The limits were set to expire at the end of this year. This is especially critical for California, where more than 80 percent of all loans are financed by Fannie Mae, Freddie Mac, or FHA, and will help maintain the positive signs we are now seeing in California’s mortgage market. President Obama is expected to sign the resolution today or tomorrow as part of a broader piece of budgetary legislation that will prevent a government shutdown.

While home prices in California have declined, the demand for housing has not. The market has been dominated by first-time home buyers who have faced a shortage of financing opportunities. The loan limits are set at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas, including many regions in California. Sales in move-up and high-end markets have been constrained this year; the loan limits extension will help qualified home buyers in these markets to move forward with their purchases.

Although loan limits are safe through 2010, there is still work to be done. Congress has yet to act to extend the First Time Home Buyer Tax Credit past its current Nov. 30 expiration date. Yet the impact of the home buyer tax credit is clear: A C.A.R. survey of first-time home buyers shows that 40 percent would not have purchased a home without the tax credit.

In tandem with our efforts to extend the current loan limits, C.A.R. and NAR are vigorously working to have the soon-to-expire federal First Time Home Buyer Tax Credit extended, and we need your help.

I am asking every one of you to contact your congressional representative today. In the Senate, an amendment offered by Senators Dodd, Lieberman, and Isakson will both extend the program into 2010 and expand the eligibility requirements. The amendment has been attached to a bill that will extend unemployment insurance benefits. We expect the bill will pass the Senate and then be voted on by the House of Representatives.

Please call your Congressional Representative to urge them to support the Unemployment Extension bill that contains the home buyer tax credit. Please call (800) 961-3302 and enter your PIN number 195517903 when you are prompted to be connected to your legislator’s office.

Thank you for your help with this effort. Together, we can make a difference in Washington, D.C.

rockey@mresolution.com