Federal Government Institutes New Reduced Home Loan Limit

October 27, 2011 by  
Filed under Short Sale/Loan Modification Blog

The first of October marked the government’s nationwide loan limit reduction on conforming loans.  The restrictions apply to bank made loans that the government will buy or insure.  During the harshest moments of the recession, these limits were actually increased to spur the economy.  In higher cost states like California and New York, the increased ceilings helped stimulate the economy, though to a minimal degree.

The market is still fragile, but proponents of the new limits believe that only a select few will be impacted including large balance borrowers in California.  Those unsure of the new restrictions don’t understand why the government is placing any form of impediment in the way of the housing market recovery.

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