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Government Announces Conforming Loan Limit Increase

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The Office of Federal Housing Enterprise Oversight (OFHEO) announced it has temporarily increased limits on conforming loans offered by government-sponsored enterprises, Fannie Mae and Freddie Mac, from $417,000 to as high as $729,750 in fourteen counties in California for loans originated between July 1, 2007 and Dec. 31, 2008. Fannie and Freddie are reported to be working out new underwriting standards and expect to begin offering the new loans
soon.
Additionally, the government raised the conforming loan limit for mortgages guaranteed by the Federal Housing Administration, and has begun offering the maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008.
By raising the conforming loan limit to $729,750 in LA County, we should see a boost in local real estate sales. Buyers that have been sitting on the fence will see a bigger incentive now to purchase with lower interest rates. While the exact rates have yet to be determined, it is presumed that this new ‘conforming jumbo’ loan will be 1/2 to 3/4 of a point lower than the existing jumbo rates. This should positively effect the demand for condo sales in the Westwood area, which have been sluggish as of late. This in turn will help make the condo sellers great prospects for move up buyers for single family homes in the area. Effectively increasing the already
strong demand for single family homes in Westwood.