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  • Comment Detail

  • Date: 12/19/13
    First Name: Sam
    Last Name: Locricchio
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: 2013-N-18

  • Comment

    I don’t believe lowering the Fannie Mae’s or Freddie Mac’s limit would accomplish much of anything other than possibly taking more money out of the market place. If the goal of the FHFA is to limit taxpayer’s exposure to loss, it is my opinion the only way to limit loss is to have good sound underwriting whether it’s underwriting a $400,000 mortgage or $417,000 mortgage.

    If the FHFA’s goal is to put more private money in the market place by lowering the limit, I don’t see that happening. According to the latest release from Lending Tree, Hawaii leads the nation in average home loan amounts. The average loan price there is $677,299. The average loan exceeds that of the FHFA’s limit. Washington, D.C. takes second on the highest priced loan amounts, averaging $393,453. New Jersey comes in third with an average of $344,240 and New York in fourth at $340,124. As you can see, $400,000 would cover the majority of states and the majority of households. In my opinion little if any new private money would enter the marketplace.
    Why lower the limit just for the sake of lowering it. In my opinion, it accomplishes nothing but hurts those who might just be over the proposed new limit.
    Redfin finds a majority—83 percent—of buyers believe a “normal” interest rate for a fixed-rate, 30-year mortgage loan is less than 5 percent.
    Furthermore, a significant portion of homebuyers—42 percent—says they “would be unable or unwilling to buy a home if rates rose further.”
    In contrast to what today’s consumers view as “normal,” the average mortgage rate since 1990 is 6.7 percent, according to Redfin. In fact, rates did not fall below 5 percent until March 2009.
    However, only 5 percent of homebuyers view a mortgage rate above 6 percent as “normal,” according to Redfin’s survey results.
    “Even more surprising, both seasoned and first-time buyers think a rate below 5 percent is normal,” Redfin said. One in three first-time buyers view a rate below 4 percent as normal, while one in four seasoned buyers view a rate below 4 percent as normal. My point is, if rates go up, it won't matter what the mortgage limit is, there will be fewer buyers with fewer options.... Why?