There was a blurb over in the Santa Cruz Sentinel recently on the progress of increasing the loan limits on FHA loans:
SACRAMENTO — The California Association of Mortgage Brokers is lobbying to raise the Fannie Mae and Freddie Mac loan limits in California from $417,000 to $625,000 as a way out of the mortgage mess.
Such a change would allow tens of thousands of California homeowners to refinance out of their risky subprime loans, reducing their interest rates and payments, and obtaining affordable loans, said group president Pete Ogilvie, a Santa Cruz mortgage broker.
The House of Representatives passed HR 1427, the “Federal Housing Finance Reform Act of 2007,” May 22, allowing government-backed loan limits to be raised. The Senate version of this bill passed the Senate Banking Committee but the full Senate has yet to act.
The House also passed HR 1852, which could increase FHA loan amounts, on Sept. 18 but the Senate has not taken action. A 2005 study by the California Association of Mortgage Brokers projected that raising conforming loan limits would cut interest rates for more than 150,000 borrowers, allowing them to buy a median-priced home. The state median is $588,970.