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

I wanted to share this information from our mortgage consultant Alice White. We have been very blessed to have her as a resource for Prudent Money. She sent this and we need to take some action. This would be a good thing for the mortgage markets.

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 Senators Cornyn and Hutchison that these new loan limits must be included in the economic package.

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Send this sample letter to Senators Cornyn and Hutchison:

Subject: Support Inclusion of Housing in the Economic Stimulus Package

Dear [decision maker name inserted here],

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,

Alice Hinckley

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