On Oct. 1, Congress allowed conforming loan limits to revert from 125 percent of the local area median home price to 115 percent of the local median home price. Recently, some members of Congress have been spearheading an effort to temporarily reinstate the higher limits to help the housing and mortgage markets stabilize.
"As advocates of home ownership, REALTORS® applaud the members of Congress who are standing up for America's families rather than turning their backs on them," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "Hardworking middle class families have been directly affected by lower limits. Since the loan limits were lowered, buyers who now find themselves above the new lower conventional conforming loan limit are facing significantly higher interest rates and substantially larger down payments."
In the Silicon Valley region, the conforming loan limits of $729,750 were reduced by $104,250. This means buyers who need mortgages for more than $625,500 are now forced into the jumbo market, which means they would be paying higher interest rates, or unable to buy a home.
The California Association of REALTORS® (C.A.R.) estimates more than 30,000 California families now face higher down payments, higher mortgage rates, and stricter loan qualification requirements with conforming loan limits on mortgages backed by FHA, Fannie Mae, and Freddie Mac now reduced. In Santa Clara County, C.A.R. estimates nearly 8 percent of potential home sales would be rendered ineligible under the lower GSE loan limit, and 12.2 percent would be deemed ineligible under the lower FHA limit.
"The loan limits provision is fully paid for, and won't cost taxpayers a dime. If families cannot obtain financing to buy, home prices will continue to fall. This will further erode the wealth of families in our community and across the country, and will prolong the nation's economic recovery," said Lentz. "As individuals and families everywhere are trying to gain a foothold in these trying times, we need to give them the resources to do so."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.