Stimulus Package may make it easier to get mortgages for those in default and those with “jumbos”

The details are complicated, but the Wall Street Journal reports that the stimulus package will probably include some features that will make it easier for some people to get mortgages.

Most mortgages these days (about 70%) are being bought up or guaranteed by Fannie Mae or Freddie Mac, two government licensed private corporations. Currently, the maximum mortgage they will work with is $417,000. Mortgages above that amount have had very high interest rates because they cannot be “sold” to Fannie or Freddie. The stimulus package would raise this limit in high cost areas, maybe to as much as $729,750, although the Treasury says the maximum will be $625,000. This will reduce interest rates on these mortgages and make them easier to get.

This change would be temporary (through the end of the year) although it would be permanent for loans guaranteed by the Federal Housing Adminstration (FHA) a government agency.

The package will also loosen the requirements for qualifying for FHA mortgages, which will allow more borrowers facing defaults to refinance through the FHA. This could save many foreclosures.

There will also be more money for housing counseling for those who fall behind on their mortgages.

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