Anyone think the raise in the "conforming" loan limit is a bad idea?

Xin Lu · 02-08-2008, 05:41 PM

It seems that the stimulus package is being marketed as an awesome tax rebate, but with it there is a raise in the FHA conforming mortgage loan limit in expensive regions. I just wrote a blog about it here: http://baglady.dreamhosters.com/2008...mulus-package/

So what do you guys think? Will this change bring about economic armageddon?

Jeremy · 02-08-2008, 06:10 PM

I'm with you, and I think that what we really need in order to resolve this mess is to have real estate prices come back down to Earth. Pricing has gotten way out of hand in many areas, and it is ridiculous to think that we can somehow maintain it. To artificially try and keep home prices higher than the basic law of supply and demand dictate will only create more problems down the road.

I can understand how increasing the loan limit can possibly prevent some foreclosures, but it also opens the door for continued abuse by speculators and others who otherwise have no business buying a home in this price range.

While I'd love to live in a world where my home increases in value by double-digits every year, I know that this isn't sustainable. It is already incredibly ridiculous to try and find affordable housing in a major metropolitan area, and if things continue, we're just going to have an even bigger problem on our hands. Sure, declining home values are painful, but I think that is what needs to happen as opposed to trying to use a band-aid by playing with conforming loan limits and other temporary tactics.

khorrell · 02-09-2008, 10:58 AM

Great post at your blog! Yup, raising the conforming loan rate is probably going to prop up the market a bit. Do you know if this is a temporary or permanent change?

02-08-2008, 05:41 PM	#1
Xin Lu Wise Bread Blogger Join Date: Jan 2008 Posts: 212 Reputation: (25)	Anyone think the raise in the "conforming" loan limit is a bad idea? It seems that the stimulus package is being marketed as an awesome tax rebate, but with it there is a raise in the FHA conforming mortgage loan limit in expensive regions. I just wrote a blog about it here: http://baglady.dreamhosters.com/2008...mulus-package/ So what do you guys think? Will this change bring about economic armageddon? __________________ Blogs I Write: The Baglady @ http://baglady.dreamhosters.com Wise Bread @ http://wisebread.com/xin-lu

02-08-2008, 06:10 PM	#2
Jeremy Member Join Date: Jan 2008 Posts: 34 Reputation: (12)	I'm with you, and I think that what we really need in order to resolve this mess is to have real estate prices come back down to Earth. Pricing has gotten way out of hand in many areas, and it is ridiculous to think that we can somehow maintain it. To artificially try and keep home prices higher than the basic law of supply and demand dictate will only create more problems down the road. I can understand how increasing the loan limit can possibly prevent some foreclosures, but it also opens the door for continued abuse by speculators and others who otherwise have no business buying a home in this price range. While I'd love to live in a world where my home increases in value by double-digits every year, I know that this isn't sustainable. It is already incredibly ridiculous to try and find affordable housing in a major metropolitan area, and if things continue, we're just going to have an even bigger problem on our hands. Sure, declining home values are painful, but I think that is what needs to happen as opposed to trying to use a band-aid by playing with conforming loan limits and other temporary tactics. __________________ Generation X Finance - Helping a unique generation achieve financial independence. Financial Planning at About.com

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02-09-2008, 10:58 AM	#3
khorrell Senior Member Join Date: Jan 2008 Posts: 283 Reputation: (35)	Great post at your blog! Yup, raising the conforming loan rate is probably going to prop up the market a bit. Do you know if this is a temporary or permanent change?