Mortgage Foreclosure & Refinance Resource

The economic stimulus package passed by Congress last night would temporarily permit Fannie Mae and Freddie Mac to buy or guarantee mortgages 25 percent higher than an area’s median home price — to a maximum of $729,750, up from the current limit of $417,000. A federal regulator yesterday suggested that a measure that would allow Fannie Mae and Freddie Mac to take on jumbo mortgages could divert loan money from less expensive housing. Funding one $600,000 mortgage takes as much capital as funding three $200,000 loans, James B. Lockhart III, head of an agency that oversees the federally chartered mortgage companies, told the Senate Banking Committee.

Lockhart, director of the Office of Federal Housing Enterprise Oversight, testified that the change would push the companies deeper into some of the riskiest real estate markets, including parts of California. Chartered by the government to bring affordability and stability to the housing system, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors, promising to pay the loans if the borrowers default.