Gabe's Blog

You may have heard that the House of Representatives passed the American Recovery and Reinvestment Act of 2009 (i.e. the Stimulus Bill).

The bill does include provisions to re-establish the 2008 mortgage limits for the remainder of 2009 for both FHA and Fannie Mae and Freddie Mac. Accordingly, if and when the final Stimulus bill is passed, the 2008 limits will be in effect again. This would mean that the High Balance Conforming Loan Limit should be increased from $625,500 to $729,950 in the Bay Area (at this point in time, I am not sure how areas like Napa, Monterey and the Central Valley counties will be handled - as you may recall, those counties had loan limits under the High Balance program that were less than the maximum of $625,500 - so I am not sure if their respective limits will be increased to $729,950 or some percentage thereof).

The next step in the process is to gain approval from the Senate; barring an unexpected surprise, we expect this bill to pass by mid-February and the 2008 limits should be effective virtually immediately. I do not believe lenders will begin to accept applications for the "new" (or would it be the "old") loan limits until such time as the bill is signed into law by President Obama. That being said, I would not expect the increased loan amounts to have any real affect in our marketplace until March 1.

We will probably see some messages in the next few days from banks and brokers announcing the higher limits as being a foregone conclusion. Just note, that this is not yet passed into law and many lenders will most likely not accept any loans into the system at any amounts over $625,500. I will be passing along more information as the situation gets closer to a resolution. If you have any questions, please don't hesitate to give me a call.