Jumbo conforming loans?
The current cap is $417,000. Part of the fallout from the credit crunch that hit last summer is a lot less lender interest in making "jumbo" loans that top that amount. They can't be packaged and sold to Fannie or Freddie, and the Wall Street investor cash has dried up. That means higher interest rates for jumbo borrowers.
What exactly the new limit would be is a bit of an open question.
The idea is to make it easier for people in high-cost markets to buy and refinance. The Baltimore metro area isn't one of the places typically talked about as a prime beneficiary, but there are a fair chunk of jumbo-loan-priced homes here.
Fannie and Freddie are known as GSEs -- government-sponsored enterprises. The Office of Federal Housing Enterprise Oversight, which oversees them, isn't keen on the higher cap proposal. OFHEO Director James B. Lockhart issued this statement yesterday:
We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.
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