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REALTOR®: Realtors Hail Economic Stimulus Package

Stimulus package includes loan limit increase to help California homeowners

Monday, January 28, 2008

The San Mateo County Association of REALTORS® hailed the recent announcement of a tentative agreement that would help California individuals and families achieve the American dream of homeownership. The economic stimulus package tentatively agreed to by Congressional leaders and President George W. Bush includes an important provision for homeowners: a one-year increase to $625,000 nationwide and up to $729,000 in high-cost areas like the Peninsula and South Bay in the conforming loan limit for loans that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can purchase. The current limit is $417,000.

The National Association of REALTORS® (NAR) vigorously lobbied President Bush and Congress to help homeowners and the national economy by loosening constraints on Fannie Mae and Freddie Mac as an integral part of a federal stimulus package.

NAR, the California Association of REALTORS® and SAMCAR have been calling on Congress and the administration for a permanent increase in the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000.

“This change will permit more families to enter the housing market by making more mortgages available with lower interest rates. Increased home sales will lower inventories and immediately start stabilizing the housing market and the economy,” NAR President Dick Gaylord said.

2008 SAMCAR President Sue Walsh said, “Increasing the conforming loan limits is very important for families who live in areas in our country where the cost of housing is way beyond the norm. We urge Congress to take these actions to stabilize the housing market and protect homeowners.”

In addition, Realtors have been actively advocating for quick passage of the Federal Housing Administration Reform bill. A reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and credit crunch.

“FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” said Gaylord.

NAR estimates lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion. An additional NAR report shows increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.

“This is the quickest way to help the hurting housing market,” said Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars.”

Walsh believes more is needed to prevent a recession.

“In addition to increasing conforming loan limits, we need to find other ways to stabilize the economy. People need to have job security, know the economy is not in trouble and have the confidence that things aren’t going to be volatile,” said Walsh.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR 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 San Mateo County.

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 contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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