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Housing markets about to be squeezed

By tovarichpeter   2013 Sep 13, 3:32am   ↑ like   ↓ dislike   849 views   5 comments   watch (0)   share   quote  

http://finance.yahoo.com/news/housing-markets-squeezed-120214467.html

A plan to lower the cap on federally backed mortgages may hit home buyers particularly hard in several pockets of the country, new data shows. The Federal Housing Finance Agency plans to reduce the maximum size of mortgages backed by Fannie Mae and Freddie Mac this January. The current limits are $417,000 in most parts of the country and up to $625,500 in more expensive markets. The agency hasn't announced how much it will lower loan caps, but data compiled for MarketWatch by Lender Processing Services, a mortgage-data tracking firm, shows that a decline of just $25,000 from the current...

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1   smaulgld   2013 Sep 13, 8:00am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Shouldnt impact all cash buyers

2   iwog (221/221 = 100% civil)   2013 Sep 13, 8:04am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Shouldn't impact anyone. Non-conforming loans are already the same rate or sometimes even cheaper than conforming loans.

It might have a small effect on qualification standards however I'm betting banks will simply copy what Freddie and Fannie already have on the books.

3   smaulgld   2013 Sep 13, 8:13am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

iwog says

Shouldn't impact anyone. Non-conforming loans are already the same rate or sometimes even cheaper than conforming loans

right so what is the purpose?

4   PockyClipsNow (11/11 = 100% civil)   2013 Sep 13, 8:15am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

This will never happen. NAR wont allow it.

5   iwog (221/221 = 100% civil)   2013 Sep 13, 8:41am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

smaulgld says

right so what is the purpose?

The purpose used to be to expand the amount of money available for lending. Freddie and Fannie would sell bonds and those bonds would be used to purchase or guarantee private mortgages.

The world is much different now.

1. Private mortgage bonds are now a liquid market separate from Freddie and Fannie.
2. There's an ocean of cash just begging for returns at ridiculously low rates.
3. The federal reserve is donating money to mortgage bonds.

As a result what used to be a private money premium has now shrunk to zero.

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