Tell the Senate that the Economic Stimulus Package Must Contain Relief for Homeowners

The much needed and welcome economic stimulus package is now in the hands of the U.S. Senate. But the Senate must include new loan limits on FHA and Fannie Mae and Freddie Mac loans. America's housing market needs this help.

NAR wants a stimulus package that will be good for America’s home owners now and for future homeowners to come. 

Take Action and make your position known. Tell your Senators that including these new loan limits must be included in the economic package.

Sample Letter for Campaign

Subject: Support Inclusion of Housing in the Economic Stimulus Package

Dear [ Decision Maker ] ,

As a constituent and a REALTOR, I want to stress how important it is for the Senate to include increases for the FHA and GSE loan limits in the Senate's economic stimulus package. These provisions will create safe and affordable mortgage options for our state's homeowners and provide much needed stability for our local economies.

The critical role that Fannie Mae and Freddie Mac (GSEs) play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in my market. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.

Raising the GSEs' conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on our already fragile housing markets. According to the National Association of REALTORS, increasing the GSE loan limit will result in more than 300,000 additional home sales and strengthen current home prices by 2 to 3 percent.

I also believe that increasing the FHA loan limits is critical to helping bolster our fragile housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high costs states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices. These increases will help an additional 138,000 Americans purchase and 200,000 families refinance their homes safely and affordably.

I hope I can count on you to support including increases for the FHA and GSE loan limits in the Senate's economic stimulus package. Our national housing and mortgage finance markets need stability and an immediate infusion of liquidity. Both of these provisions are necessary if our nation's families, housing markets and economy are to move beyond the crisis they now face.

Sincerely,

Campaign Launched:
January 30, 2008


Background Information

NAR supports legislation to modernize the Federal Housing Authority (FHA) single-family mortgage insurance program and make FHA loans an available financing option once again. Had FHA loans been a viable product in the recent past, many families would not have fallen prey to the risky sub-prime mortgages causing record numbers of defaults and foreclosures. 

NAR also supports efforts to increase the Fannie Mae and Freddie Mac (GSE) loan limits to make homebuying more affordable in the nation’s highest cost areas.  Allowing regional adjustments to the conforming loan limits is a matter of simple equity for the families residing in high cost metropolitan areas.

About Federal Housing Authority (FHA) Reform 

  • FHA loans are limited in many areas of the country by mortgage limits that are too low
  • Low FHA loan limits helped steer many borrowers into “specialty” mortgages contributing to the foreclosure and mortgage crisis we face today.
  • NAR supports an increase of the FHA high cost loan limit from $362,790 to $729,750. In non-high cost areas, the FHA limit would increase from $200,160 to $271,050 for single unit homes. 

About Freddie Mac/Fannie Mae (GSE) Loan Limits

  • Freddie Mac/Fannie Mae conforming loans are not readily available to homebuyers in the nation’s high cost metropolitan markets. 
  • The 2007 Freddie Mac/Fannie Mae loan limit cap of $417,000 is well above the national median sales price of $220,800 for single family homes and exceeds the local median in most housing markets, BUT it is consistently well below the local median in high cost areas.
  • Increasing the Freddie Mac/Fannie Mae loan limits will also help inject more mortgage money into the market.
  • Increasing the loan limits will help boost the national homeownership rate.

Status in Congress

On Wednesday, January 29, 2008, the House of Representatives passed a bipartisan economic stimulus bill (H.R. 5140) that includes temporary increases in the GSE and FHA mortgage loan limits.

The House economic stimulus bill increases the Fannie Mae and Freddie Mac loan limit for loans originated from July 1, 2007 to December 31, 2008, to the lesser of 125% of the area median home price or $729,750.

The House bill also increases FHA loan limits up to the greater of $271,050 or 125% of area median home prices, capped at $729,750 in high cost areas.