Higher mortgage limits offer help

Stimulus package change expires at end of the year

By BEN van der MEER
bvandermeer@modbee.com

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Northern San Joaquin Valley home buyers have new mortgage limits for loans guaranteed by federal regulators.

In Stanislaus County, a home mortgage value of $423,750 or less is now considered a conforming loan, meaning such loans can be bought or guaranteed by government-sponsored mortgage companies Fannie Mae and Freddie Mac.

For San Joaquin County, the limit is $488,750; Merced County, $472,500; and Tuolumne County, $437,500.

The change also applies to loans backed by the Federal Housing Administration to help low- and middle- income home buyers. Officials with that agency said that as a result, up to 250,000 additional home buyers will be able to either buy homes or refinance their existing loans.

However, the conforming loan classification lasts only until the end of the year. Changing the limits to qualify more loans as "conforming," rather than "jumbo" loans, was part of the economic stimulus package passed in Washington, D.C., last month.

Gov. Schwarzenegger and real estate agents and lenders hope to convince Congress to make the limit changes permanent.

"No other state has been more impacted by the ongoing mortgage crisis than California, and the announcement ... will help more working Californians achieve the American dream of homeownership through less expensive and more secure loans," Schwarzenegger said in a statement Wednesday.

By changing the limits, housing experts believe, investors will be more likely to buy securities that include more expensive mortgages.

That, in turn, should help increase home buying and loan refinancing, and also help lower interest rates, experts believe.

The new limits are based on a value that is 125 percent of the median home price in each county.

During the real estate boom of a few years ago, home values in many California counties soared past previous conforming loan limits. Even as the housing market has gone bust in recent years, many home loans are still out of reach under those limits.

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.