As the housing market and the overall U.S. economy continue to falter, a group of real estate industry executives recently took the time to draft a letter to John Boehner, Speaker of the House; Nancy Pelosi, Office of the Democratic Leader; Majority Leader Harry Reid and Minority Leader Mitch McConnell regarding the expiration of the mortgage loan limit formula and its effect on the industry as a whole.
Even though the loan limits represent just one item that is negatively affecting housing and mortgage credit at the moment, the industry leaders who took the time to participate in writing and signing the letter are strongly urging Congress to act quickly and reinstate the mortgage loan limit formula that expired on September 30, 2011. The reinstatement and extension has already passed in the U.S. Senate, but it’s crucial that the House of Representatives follow suit.
The recent expiration of the loan limits can be felt across the board, affecting 669 counties in 42 states, making it difficult for potential buyers to enter the market. The limit reductions that apply to Federal Housing Administration (FHA) insured loans and other government-backed mortgages will prevent many potential buyers from being able to access the affordable credit needed to purchase a home. In addition, any loans outside of the FHA, VA, and conforming mortgage limits have higher interest rates and more burdensome requirements, including high downpayments, which prevent buyers from obtaining a mortgage at all or making it much more costly. The letter goes on to state that there is little to no benefit to the government when it comes to reducing these limits, especially when it comes to FHA loans.
Not only do the real estate executives represented in the letter believe that Congress can quickly fix the situation by restoring the high cost mortgage loan limits as soon as possible, they also stand ready to assist as Congress continues to work toward improving the housing market and the overall U.S. economy.
The recent expiration of the loan limits can be felt across the board, affecting 669 counties in 42 states, making it difficult for potential buyers to enter the market. The limit reductions that apply to Federal Housing Administration (FHA) insured loans and other government-backed mortgages will prevent many potential buyers from being able to access the affordable credit needed to purchase a home. In addition, any loans outside of the FHA, VA, and conforming mortgage limits have higher interest rates and more burdensome requirements, including high downpayments, which prevent buyers from obtaining a mortgage at all or making it much more costly. The letter goes on to state that there is little to no benefit to the government when it comes to reducing these limits, especially when it comes to FHA loans.
Not only do the real estate executives represented in the letter believe that Congress can quickly fix the situation by restoring the high cost mortgage loan limits as soon as possible, they also stand ready to assist as Congress continues to work toward improving the housing market and the overall U.S. economy.
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