Friday the government released the new Fannie Mae and Freddie Mac maximum loan limits and it simply makes no sense to me. One of the biggest problems facing this economy is the real estate market. The losses, both actual and unrealized, are in the billions. Five to ten percent of the houses in America are facing foreclousre because most of these houses have higher loans than the properties are worth. Then why not make it easier to get a loan by raising every state in the union to the new maxim loan limit for single family residences, $625,500? This does not mean everyone gets a loan for $625,500. It means everyone who has the proper loan to value, earnings, credit and reserves can get a loan up to $625,500. Instead, the powers that be allowed a section in each of the following 17 states to be able to fund loans up to $625,500. I don't even think that was a good idea, and that will be discussed in detail later.
Hawaii, Alaska, (Guam and the Virgin Islands?) have already been given the $625,500 years ago and will be left out of this discussion. It is interesting to note that Honolulu and Kauai have been raised into the $700,000 range although I cannot see any benefit to the nation for this increase.
The following states have had counties raised to $625,500 because their home prices have reached 115% of the median home prices in their respective county. We start with California which had 10 counties qualify including Los Angeles, Orange and San Francisco but not Santa Barbara or San Diego. Next was Colorado with 6 counties, Washington D.C. and Idaho with its Teton county. Maryland had 5 counties, and Massachusetes had Dukes and Nantucket. New York had 10 including New York, Bronx and Queens while New Jersey had 11including my wife's birthplace, Bergen county. North Carolina had 3 counties, Pennsylvania had one, Pikes County, Virginia had the most with 15 counties and West Virgina and Wyoming also each had one. That gave us 12 states and one district.
Florida, Georgia, Rhode Island, Utah and Washington all had some counties raised but none up to $625,500. They were raised to 115% of the counties median home prices. The rest of the states, 31, were all left at $417,000 as the conforming limit for single family residences.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.