HOUSING: FHA loans to be available to fewer buyers - North County Times (blog)

Loans guaranteedby the Federal Housing Administration allow homebuyers to makepurchases with down payments as low as 3. Realtors In addition, those are the largest mortgages that governmentlending giants Fannie Mae and Freddie Mac will buy from lenders,holding down the cost of those loans. The government raised limitsto these levels in March 2008 to replace a missing-in-action jumboloan market after lenders stopped making such mortgages in the wakeof a foreclosure crisis. Realtors and mortgage bankers said the move will depress prices,as fewer buyers have the larger down payments ---- typically 20percent of the purchase price ---- that would be required withoutloan guarantees, and removing government support could raise thecost of borrowing at the higher amounts. Realtor organizations arepushing to get the higher limits extended past Oct. The median price of houses and condos in North County reached$385,000 in 2010, according to an analysis of county assessor data. PeggyYeomans, chairman of the board of the North San Diego CountyAssociation of Realtors, said forcing more potential buyers to putdown 20 percent would keep people out of the market. In Southwest Riverside County, where the median price of housesand condos in 2010 was about $200,000, 590 houses would have missedout on FHA financing with lower loan limits, 4. The small number of sales in that sector is exactly the problem,said GeneWunderlich, government affairs director of the SouthwestRiverside County Association of Realtors. But with Congress on recess,Wunderlich said he is worried about running out of time. Not everyone thinks the loan limits should kept high. Very, very slowly, more and more lendersare coming to the market and the mortgage insurance is comingback," Goldman said. Thornberg argued that if lower loan limits push down prices,then maybe that's not so bad. This material may not be published, broadcast, rewritten or redistributed.