New Mortgage Limit May Set Buyers Back

This is old, old news that anybody considering buying a place has been well aware of for quite some time now, and has had to make plans for. Not a new paradigm....

Though I have to say that aside from that point, the part of this article that stuns me is "...The two, who now rent an apartment in Gramercy Park with their 18-month-old son, Milo, are in contract to buy a one-bedroom duplex with a recreation room and a yard for $749,000. They qualified for a Federal Housing Administration loan, which allows them to put just 3.5 percent down and borrow $722,000..."

1.) They have an 18 month old kid who eventually will need their own bedroom, and they're buying a one bedroom unit?

2.) They are only putting 3.5% down?!? Jesus. If the market corrects only a little, they are completely underwater!

Not to mention the correction is baked in already. The next fools will only be able to afford $625K - 3.5%, apparently.
I love David Maundrell's quote about buyers rushing to buy before September 30th. I guess they wouldn't want to spend less on October 1st, that simply wouldn't do now.

Real estate corrections take a long time. This will be going for years to come.

And yeah. What business do they have buying someplace with 3.5% down? Maybe they can trade in food stamps to buy the place, too.

HAHAHAHAHA!

"2.) They are only putting 3.5% down?!? Jesus. If the market corrects only a little, they are completely underwater!"

Of course, you care a lot less that you're completely underwater when you've only put 3.5% down. On the other hand, being underwater makes you a lot more likely to strategically default, which is why outside of FHA, VA, etc. loans most banks have wised up and won't let you do this anymore.

"...being underwater makes you a lot more likely to strategically default, which is why outside of FHA, VA, etc. loans most banks have wised up and won't let you do this anymore."

How can banks 'not let you strategically default?'

"How can banks not let you strategically default?"

Well, if the bank hasn't lent to you yet, then it can decline to lend unless you have equity in excess of any realistic depreciation. If the bank has already lent to you, then depending on your circumstances it may be able to pursue a deficiency judgment, or at least threaten you with one.

I think jordyn was talking about banks not letting you put down 3.5%-ish, not not letting you strategically default.

Post87deflation - I thought banks can only go after you in certain states that allow it. Many states are non-recourse states which means anyone can strategically default and hand the keys back.

(Of course this will ruin credit for 7 years.)

Senate Adopts Measure to Increase Fannie, Freddie Loan Limits

Oct. 20 (Bloomberg) -- The U.S. Senate adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750.

Senator Robert Menendez, a New Jersey Democrat, offered the increase as an amendment to a spending bill today. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.

“If we want to get the economy moving, the housing market has to be part of it,” Menendez said tonight on the Senate floor.

The Senate adopted the amendment 60-31. The amendment required 60 votes for approval and was offered during the chamber’s consideration of a package of spending measures. If the Senate passes the underlying bill, the House would then have to vote for it to become law.

Senate adopted the amendment 60-31. The amendment required 60 votes for approval and was offered during the chamber’s consideration of a package of spending measures. If the Senate passes the underlying bill, the House would then have to vote for it to become law.

Isn't this what got us into trouble on the first place?

idiots!

How soon we forget!

Bullish for real estate prices.

One must commend the builders, developers and real estate agents lobby. Well done! You will reap handsome rewards while the country collapses in heaps around you.

Pulasi I agree. We, the taxpayers, investors suckers will have to clean up another mess.