Last is the long term hope for a more orderly mortgage market in Fannie Mae and Freddie Mac. They are the major purchasers of conforming loans, those loans that conform to their rules, and currently have two sets of upper limits. Forty Eight states have a $417,000 limit for single family residences and higher limits for duplexes, triplexes and four-plexes, while Hawaii, Alaska, Guam and the U.S. Virgin Islands are considered high cost states. Huh???

As high cost states their limits are 50% higher. Congress has been talking about raising the limits on additional states but hasn't ever gotten around to it.

The number one state that needs to be a high cost state is California, where nearly half of the jumbo loans in America exist. New York, New Jersey, Connecticut and Massachusetts need to be in there also. If we could get the increase in the states that put an extra burden on the mortgage backed pools (where the problem currently lies) then a quicker permanent solution would be in place.

Should the aforementioned increases not be politically popular (we have politics in everything) then a general lifting of the Fannie Mae and Freddie Mac limits should be put in place even if it is a lower number than the high cost areas. Reducing the stress is what is needed. Its good for individuals and its good for business as well.

Now that we have an open wound let's cure it and forget the bandages. Festering of an open wound is more dangerous than the initial wound. Let's not let that happen.