House leaders back $625,000 conforming loan limit (real estate, insurance, mortgage)

[Jamesww]

Hey what does everyone think of this change in conforming loans limit, below is the link to the story.

Inman Real Estate News - House leaders back $625,000 conforming loan limit

[arbucle]

I think it sucks.Now when these loans go bad the taxpayers will have to foot the bill and not the banks.Its only proposed for one year ,hopefully.The 300 dollar check they will be giving to people who dont even pay taxes sucks too.They will go to wal mart and buy cheap crap made in some third world hellhole and this will spur economic expansion in the USA . HA HAThis is nothing but trying to buy votes.It will just create more inflation and the dollar will buy less than before.

[Mom2Feebs]

Originally Posted by Jamesww

Hey what does everyone think of this change in conforming loans limit, below is the link to the story.

Inman Real Estate News - House leaders back $625,000 conforming loan limit

It just confirms for me that the House is full of Idiots.

[professorsenator]

Originally Posted by arbucle

I think it sucks.Now when these loans go bad the taxpayers will have to foot the bill and not the banks.

Actually, that's not technically true. FannieMae, the primary backer of mortgages, is a for-profit corporation. FannieMae's primary business is to effectively provide insurance backing for mortgages that are owned by banks and other investors. It protects mortgage issuers from losses in the event of a borrower default. In exchange for this guarantee, FannieMae collects a fee on the mortgage. If a borrower defaults, FannieMae pays the mortgage holder (bank, etc.) through its insurance reserves. The only way the federal taxpayer would have to pay is if FannieMae were to somehow be unable to pay on its claims. The assumption is that because FannieMae is federally chartered corporation, Uncle Sam would step in and financially bail out FannieMae (this is considered an implicit federal government guarantee backing FannieMae). Of course, FannieMae has always been able to pay and I have heard of NO ONE who suggests that a default by FannieMae is likely.

Raising the conforming loan limit means that FannieMae would issue insurance premiums on higher dollar loans. Since many parts of the country have large amounts of housing that sell at a rate higher than the current $417K limit, the thought is that increasing the conforming limit would help stave off a complete collapse of housing prices which would, of course, hurt the entire country (and global economy). I think most economists would agree that if the goal is to avert more drops in the housing market (which is already having a big drag on the economy) raising the conforming limit would be a good idea. Hence, it was included in the stimulus package.

[arbucle]

If fannie mae goes broke the taxpayers will pay making me right.USA owes 9 trillion dollars to other countries our triple A credit rating in the world is being downgraded and our money is becoming worthless overseas.Our corporations are out begging for money so they wont go under and you dont think these companies can go under,dont kid yourselves.The USA cant afford all these old people and illegals and i predict we will go under.Thats why i moved alot of my money into gold when it was 450 an ounce and is now 916 and climbing.The rest of the world has figured out we are a bad investment.
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[professorsenator]

Originally Posted by arbucle

If fannie mae goes broke the taxpayers will pay making me right.

That is an exceptionally big "if" and the chances of FannieMae being unable to meet its obligations are very small.

The idea that raising the conforming limit (as is currently under debate) will mean that taxpayers will have to bail out homeowners who are unable to pay their mortgage is demonstrably false.

[arbucle]

Tell me mister smarty pants if these loans are so safe as you say, why wont the banks put up the money anymore?Because they think its too much risk thats why!No confidence in real values of homes in this price range anymore thats why.Realestate fraud gone postal thats why.Nobody knows what housing is worth anymore so let all the risk go to the taxpayer.