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(CNN)   Fannie Mae and Freddie Mac are raising the allowable limits for government backed loans to their highest levels IN ALL HISTORY. This should end well, no reason to think it won't   (cnn.com) divider line
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    More: Facepalm, Mortgage loan, limits of government-backed loans, high-cost areas, Real estate, Mortgage giants Fannie Mae, maximum loan limit, Federal Housing Finance Agency, home prices  
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459 clicks; posted to Business » and Main » on 30 Nov 2022 at 11:50 AM (16 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



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max_pooper
2022-11-30 11:52:33 AM  
17 votes:
Borrowing limits should increase with inflation. In borrowing limit should always be the highest in all history without any "oog booga".
 
Tyrone Slothrop
2022-11-30 12:23:27 PM  
7 votes:

db2: Surely the outcome will be entirely different than 2008 this time!


Are junk bonds being created from bad loans and being rated "AAA" again?
 
GregInIndy
2022-11-30 12:25:22 PM  
7 votes:
Um, that's called inflation Subby. Every time they raise it it's the highest it's ever been.
 
max_pooper
2022-11-30 12:56:18 PM  
5 votes:

Intrepid00: max_pooper: Borrowing limits should increase with inflation. In borrowing limit should always be the highest in all history without any "oog booga".

The borrowing limits are well over the average house price.


It might come as surprise to you but some homes are above the average house price while some are below.

\averages?
\\how do they work?
\\\slashie, slash, slash
 
OptionC [TotalFark]
2022-11-30 12:49:03 PM  
4 votes:
As long as the borrower is meeting the other aspects of a conforming loan like credit rating, employment history, debt/income ratios and down payment, why does there even need to be a limit?

When we bought our current home we actually put down a smaller down payment than initially planned in order to push it into jumbo territory because jumbo rates at the time (2015) were lower than the rates on conforming loans.
 
wxboy
2022-11-30 1:01:41 PM  
1 vote:

max_pooper: Intrepid00: max_pooper: Borrowing limits should increase with inflation. In borrowing limit should always be the highest in all history without any "oog booga".

The borrowing limits are well over the average house price.

It might come as surprise to you but some homes are above the average house price while some are below.

\averages?
\\how do they work?
\\\slashie, slash, slash


Specifically, the increase of the limits tracks exactly with the increase in home prices over last year. So the increase in loan limits is clearly about maintaining the same level of access to the program.
 
JohnBigBootay
2022-11-30 1:30:10 PM  
1 vote:

GregInIndy: Um, that's called inflation Subby. Every time they raise it it's the highest it's ever been.


That's a rather unsensational and not inflammatory way to state it.
 
davypi
2022-11-30 3:22:41 PM  
1 vote:

OptionC: davypi: Not to be demeaning, but I'm going to assume that you really don't understand what the article is referring to.

I understand quite well what a conforming mortgage is, I just wonder why they bother having an upper limit on value (or at least why it is so low).  Even with the extended limits for high priced areas, virtually every house in Silicon Valley is going to be a jumbo mortgage which seems kind of silly.


Well, again, the point of these company's existence in the first place is to provide affordable housing to the general public.  I don't particularly feel like my tax money ought to be used as backup collateral for somebody who wants to buy a beach house so they can lease it out on AirBNB.  We're supposed to be funding affordable housing, not using it as venture capital.  So, my question to you would be, if you remove the limit, how are you then going to define the use of these loans in a way that keeps it reasonably restricted towards its original intent?  Honestly, I'm not sure what prices are like in the Valley and as bonkers as the market is right now I wouldn't really doubt that this is a legitimate concern.  As such, I would not be opposed to an argument that the current method we have for establishing a cap is outdated, but I'm not sure I would buy in to absolute cap removal, at least not without a very well defined loan usage policy.
 
berniex
2022-12-01 1:15:36 AM  
1 vote:

Tyrone Slothrop: db2: Surely the outcome will be entirely different than 2008 this time!

Are junk bonds being created from bad loans and being rated "AAA" again?


Yes, the outcome will be entirely different than 2008, because since 2008, there are strict FHA income documentation requirements.
Since 2008, nobody is getting a govt-backed mortgage without explicitly proving they can afford it. And it's worked very well.
 
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