Friday, December 01, 2006

Fannie Mae and Freddie Mac: Does not raise loan limit

Despite many in the East Bay living in the priciest real estate markets in the country, the federal government doesn't see it that way and reaffirmed that notion this week.

California, like most of the nation, has a Fannie Mae and Freddie Mac conforming loan limit of $417,000.

Alaska and Hawaii, as well as the U.S. territories of Guam and the Virgin Islands, are considered more costly markets and have limits of $625,500.

That $417,000 doesn't buy a lot in the East Bay, especially because the median cost for a home in Contra Costa County is $550,000 and in Alameda County is $590,000, according to DataQuick Information Systems. Solano County's median price is $460,000.

Any home loan higher than the federal limit of $417,000 is called a jumbo mortgage, which normally carries a higher interest rate. At 44.5 percent of all new loans, California had the highest rate of jumbo mortgages in the nation.

The East Bay, an area covering Alameda and Contra Costa counties, had a rate of 63.1 percent.

Jay Damato, a mortgage broker with Elite Financial in Walnut Creek, said his business has been affected by the high cost of the East Bay. Six years ago, 80 percent of his customers could use Freddie Macs or Fannie Maes, but now that number has halved.

Does this loan limit contribute to the housing slide?????


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