Posted on 11/16/2021 6:56:37 AM PST by karpov
The federal government is about to back mortgages of nearly $1 million for the first time.
The maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac are expected to jump sharply in 2022, a reflection of the rapid appreciation in home prices nationally over the past year.
The increase may make it easier and cheaper for some borrowers to buy a home, particularly in more expensive areas of the country, but the higher limits are also likely to elevate debate about how big of a mortgage is too big to be backed by the government.
“Housing prices are expensive,” said Steve Walsh, president of Scout Mortgage in Scottsdale, Ariz., adding that some of his clients are unable to qualify for loans for modest-sized homes under the current limits.
“I don’t believe these people are looking for a castle, just a three-bedroom house with a backyard,” Mr. Walsh said.
By law, the loan limits are updated annually using a formula that factors in average housing-price increases nationwide.
Currently, the government-controlled mortgage companies can back single-family mortgages that have balances as high as $548,250 in most parts of the country and up to $822,375 in expensive housing markets, including parts of California and New York.
Those limits are expected to jump to a baseline level of about $650,000 in most jurisdictions and to just under $1 million in high-cost markets.
In all, about 100 counties out of more than 3,000 counties across the U.S. are designated as high-cost markets, according to the Federal Housing Finance Agency.
The precise loan limits are set to be announced Nov. 30 by the agency, which oversees the two mortgage giants, and the new limits will go into effect in January.
(Excerpt) Read more at wsj.com ...
(Music sting)
“Let’s do the Housing Bubble again!”
Totalitarian government is the greediest, most corrupt and murderous force on Earth.
Every recession looks like a housing bubble in retrospect.
People who had jobs and lose them suddenly can’t afford those homes, they were previously qualified for.
Bkmk
“The federal government is about to back mortgages of nearly $1 million for the first time. “
That’s because a ranch style home that sells for $150,000 in Texas, would cost $1,000,000 in California
What could possibly go wrong?
Just like with student loans, right?
Regards,
High prop tax states’ pols and bureaucrats are loving this...
Folks, think about all the things the govt insures, let alone pays for.
How good is this insurance? Can they pay out?
Student loans produced a lot of worthless degrees but those houses are worth something so they will be repo'd.
Yes, I realize that my analogy was faulty, but - won't raising the limit for which Fannie Mae and Freddie Mac can back home loans have a certain inflationary impact upon the housing market? Just as the liberal student loan policy contributed to rising tuitions?
Regards,
In NJ a repo takes about 10 years due to all of the last, last, last, last chances given thru multiple mortgage modifications, privledged class dragging of feet, Chap 13, Chap 7. No joke.
So, you are right it is worth something but to actually get it back and on the market is a long, long time.
</sarc>
You’re correct.
Part of the “Big Education” cycle.
The last part of which is those high salary academics donate to Democrats.
Equity loans on already owned homes? That’s not what Freddy and Fannie do, right?
The cost of housing was rapidly increasing before Covid, and would have continued (though likely at a somewhat lower rate) to rise without Covid. The cause, I would argue, is the rise of a class of destructively stupid people both on the streets and in certain State politics who are throwing a wrench in the works for everyone else and driving shifting of people.
Instead, here we find Freddy and Fannie coming along to again help people take on more new debt which will encourage churn, which will in turn only drive up prices all the more.
And here’s where the bubble comes into it because I would argue that most people invest behind the economic wave behind their justifications for investment, and that in many places they were already overbuilding before the problems with either lumber production or the ports. To enable the continued elevation of prices, which is what this change will do, will further drive a bubble by putting off any correction.
A recession, which is when people tend to pull back with their spending, should actually help to slow down some aspects of a bubble by at least removing some of them from the pool of investors in new construction.
So the trick is to generate some kind of unemployment supplemental insurance.
Right now, you’re not even allowed to transfer title unless you can show you have fire insurance on your home. It would be an insurance bonanza.
Have they forgiven student loans yet? I thought that was still in the works.
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