Obama Administration Poised to Propose Mortgage Changes

• February 4th 2011

by Mark Wellborn

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The Obama administration could recommend reducing the size of mortgages eligible to receive government aid, The Washington Post reported this morning.

Currently, mortgages up to $729,750 are able to receive backing from the federal government, and these loans usually have lower interest rates than those that are not government-backed. Long-term (30-year) loans under $417,000 are eligible to receive the lowest rates, and as the size of the mortgage increases, the rates also go up.

The Post reports that the loan limit for mortgages receiving government support will likely be lowered to $625,500 as of September. The proposal will be part of a report expected next week that will also look into the fate of Fannie Mae and Freddie Mac.

Borrowers who will most be affected by this change are those taking out loans between what could be the new limit ($625,500) and the old limit ($729,750). From The Post:

Keith Gumbinger, a vice president at mortgage research firm HSH Associates, said he expects that borrowers who took out loans between $625,500 and $729,750 would pay “slightly more expensive rates” if the current proposal is enacted, “but jumbos were always slightly more expensive.”

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/obama_administration_poised_to_propose_mortgage_changes/2951.