Mortgage News Home

Friday August 8, 2008

Home Page   26,235 Active Members   Register Welcome, Guest    Sign In  

Home

Latest Headlines

Popular Stories

Bookmark Us

Reader Comments

SUBSCRIBE

SEARCH OUR SITE

RSS News

Mortgage Rates
  30 Yr Fix 6.52% 0.00%
  15 Yr Fix 6.10% 0.03%
  1 Yr ARM 5.22% -0.05%
  5/1 ARM 6.05% -0.02%
  30 Yr Tres 4.70% 0.04%
  Fed Prime 5.00% -0.25%
MND Features

- Wiki
- Video News
- Mortgage License Information
- Real Estate License Information
- Mortgage Content Syndication
- Mortgage Fraud
- Housing Bubble
News Archives

Submit A News Tip
or Story Idea
 

Free Subscription To News Alerts
Stay up to date on breaking news with our free News Alert Service.


Treasury Secretary Advocates GSE Assistance for High-End Borrowers

4547 Views - Printer Friendly - Email This Story To A Friend
 
RSS COMMENTS(6) LINK HERE ADD NEWS TO YOUR WEBSITE

Treasury Secretary Henry Paulson announced Monday that he was in favor of temporarily lifting the dollar limit on loans purchased by Freddie Mac and Fannie Mae, allowing them to provide a market for so-called "jumbo mortgages."

Under current rules, the two government sponsored enterprises (GSEs) cannot purchase loans that exceed $417,000. Paulson is advocating that this limit be lifted and appeared not to disagree with earlier suggestions by Federal Reserve Chairman Ben Bernanke that the new limit could be as much as $1 million. Paulson stressed, however, that he did not favor raising the loan limits forever, only until the current credit crunch eases.


Such a change, Paulson said, may help "jump start" the market for the largest home loans and would be part of a package of legislative changes which the administration has long sought to reform federal regulation of the two corporations by strengthening the Office of Federal Housing Enterprise Oversight.

Paulson suggested the changes during a speech in Orlando, Florida which is part of a three-state swing to quiet critics who have said that he did not act quickly enough to aid borrowers at risk of defaulting as their home values dropped and their interest rates reset.

The Treasury Secretary, however, did not address other limits on the GSE's lending ability. Freddie and Fannie are both working under caps on their portfolios which they say are hampering their ability to assist borrowers and lenders in the current credit crisis. Under the current rules Freddie and Fannie can facilitate the sale of mortgage loans to secondary market investors but cannot keep loans for their own portfolios above a level tied to their capital reserves. At first glance it would seem that increasing the limits on individual loans would mean that the GSE's would be able to fund fewer loans before hitting those portfolio caps.
The Treasury chief rejected recent suggestions by former Fed Chairman Alan Greenspan that government money be used to rescue Americans at risk of losing their homes. "This program is attempting to prevent a market failure and do so without government money," he said. "We are not touching the contracts in place."



Story Views: 4547 | Permalink

Story Tools



Email This Story To A Friend

Subscribe To News Alerts
 

Related Tags

Select a Tag for more information related to that Tag. (View All Tags)
 
henry paulson treasury secretary fannie mae freddie mac gse ben bernanke

 

Comments (6)

Post Comment Comments RSS


I dont know where you all live, but where I live the only house you can buy with the current limits are for the people with poor credit anyways. We have to pay about 750k for a nice home.(3000ft. 4 bed 21/2 bath) I dont believe we should be financing super homes, but why should we have to pay over 7% when they pay 6% or less. 1% difference pays for half of the prop. tax on the place. It makes a difference to us too!

Above Posted By: Alex | Tue, 8 Jul 2008 05:09:20 EST

Yes, it IS about time to raise the GSE limits. The secondary market is pretty much non existant right now... they aren't buying good loans OR bad loans. The lenders are depleting their liquidity by keeping these jumbos on their books, and soon, even the most eligible and deserving borrowers are going to have even more difficulty purchasing or refinancing. The ROE on government loans is nowhere near what it is when they are sold to secondary, but at least it's something...

Above Posted By: mortgage chic | Sun, 6 Jan 2008 22:01:19 EST

The GSE charter was for affordable housing, not bailing out private banks at the tax payers expense on million dollar loans. The market needs even more artifically cheap loans like a drunk needs more booze. Its policies like these that make housing prices high in the first place, and now they want inflate prices even more?

Above Posted By: Austrian School | Sat, 22 Dec 2007 09:51:45 EST

This is another bad idea. If a loan is worth writing then the private sector will do it. All this does is to allow more bad loans to be guaranteed by the U.S. tax payer. In my opinion they should close all of these government (Tax Payer guaranteed) programs before they become defaulting loan garbage dumps! The loan underwriting will only change if there is no bailout!

Above Posted By: reality | Fri, 21 Dec 2007 21:00:36 EST

Oh goodie! Just what I wanted for Christmas to pay for someone else's million dollar home. To the commenter above, get a clue, if the money to purchase these homes isn't available the prices will have to come down.

Above Posted By: Anonymous | Fri, 21 Dec 2007 15:57:03 EST

It is about time for them to start thinking about this, but they should stop thinking and do it! California should be a high market state and the limits should reflect this.

Above Posted By: Connie | Fri, 21 Dec 2007 11:34:05 EST


Post A Comment

Please fill out the form below to submit a comment.

Name: 
(Required - Type Anonymous or Use First Name Only if Private)
Email Address: 
(Not Required So No Fake Emails Please.)
URL or Weblog:
(Leave Blank If You Don't Have One - Use http://)
Comments: 
(Please keep comments on topic. No HTML Allowed. No Advertisng.)
Please Note: Due to Comment Spam, all comments are reviewed by hand. Most comments will appear shortly after submission but it may take up to 12 hours to appear. If you would like to come back, click here to Bookmark the page.
PLEASE DO NOT USE ALL CAPS


Character Count =     (5000 Character Limit)

If you would like to leave a longer comment, please submit your comments in 5000 character increments and we will merge your comments.
Notify me via email when my comment is approved.


Note: Please don't bother spamming. All submissions are reviewed by our our editorial staff. Comment spam and irrelevant links will not be approved.

 




NEW VIDEO
(2 New Today)
NEW! The Future of Fannie and Freddie
NEW! Fannie Flub


Reader Comments (More)
This is exactly the thing that caused Countrywide to get hammered last year and the beginning of this. Weren't they supposed to fi...
Read
Did any of you read this correctly? Can you believe this was snuck in on a housing bill? "Starting in 2011, merchant banks will be...
Read
Simply amazing, Wake up people. People are loosing their homes because of loss of jobs. Work out what, I look at financials all da...
Read
Home - Contact - Sitemap - Disclaimer - Privacy Statement - Advertising
All Content Copyright © 2003 - 2008 Brown House Media, Inc. All Rights Reserved.
Reproduction in whole or in part in any form without the express written permission of MortgageNewsDaily.com is prohibited.