Fannie, Freddie, Satan, Taxes and Mortgages Limits

There is a buzz that Fannie Mae and Freddie Mac might actually lower the maximum loan amount from the long-standing $417,000 limit.

Lower?  Really?

All through the early 21st century recession/mini-depression, the limit stayed there without a word being said even though house prices dropped in obscene amounts.

Now, there is an increase in values in every state except Delaware and Alabama.  Why then decrease the maximum and raise interest rates for a substantial number of homebuyers?

As a real estate and mortgage professional, I want to see the limits eliminated.  It’s absurd that a person buying a $750k property putting 25% down with 800 credit credit scores, making $200k per year is penalized.  They are the ones that should get the better rates so they have more money to spend into the economy.

Isn’t this what it’s all about?  The less someone pays, the more they have to spend at local places, web stores and yes, on taxes…..state, local and federal.

Philadelphia has a hard time paying for it’s schools.  Imagine 1000 people buying homes in the city where they have an extra $100 to spend per month on “stuff”.  That for a start is $120,000 more per year into the economy.  With just the sales tax, that’s $9600. Now, add that to the wage tax collected from the new employees hired and what they put into the economy and the full trickle down, we just paid for an art teacher.

You see where this is going.  I am not a trained economist, but I do see the benefits of having no limits on mortgage backed securities issues by Fannie and Freddie that investors surely would be happy to buy.

The other important part of this scenario is that if they lowered the maximum Fannie/Freddie limit, you would see a reduction in values because jumbos require 20% down.  There would be thousands of buyers eliminated from purchasing home where mortgages over the new limits were required.

It’s backwards thinking, it’s absurd risk analysis.  I wonder if this matrix is being evaluated by the same satanistic people that brought us the decision to purchase junk mortgages at the agencies?  If it is, someone should have their heads examined and these people should be shown the door.

NAR, NAHB, MBA and other industry leaders need to tell the FHFA, the CFPB, Congress and the White House how completely disastrous and frankly stupid this idea is.

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