Filed under: Good news, Federal Natl Mtge (FNM), Politics, Housing

The $150 billion fiscal stimulus package that’s winding its way through the U.S. Congress will not represent a panacea for the U.S.’s economic ills, an economist argued, but it will represent modest good news for one segment — the beleaguered housing sector.

The fiscal stimulus bill currently under discussion in the U.S. Senate calls for raising Fannie Mae and Freddie Mac’s conforming loan limit to $729,750 through 2008 from the current $417,000.

Conforming loans are conventional, fixed-rate mortgages for good credit borrowers that banks make that are eligible for purchase by Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). When Freddie and Fannie purchase these loans from banks, it “frees-up” money that the banks can use to grant mortgages to future borrowers, thus expanding the pool of funds available for mortgages.

Economist Steve Affinito told BloggingStocks Thursday that while it’s important to underscore that the higher conforming loan ceiling will not eliminate the U.S. housing sector’s recession, it is “a critical, essential step in the right direction,” in his interpretation.

Continue reading Proposed, higher conforming mortgage limits seen aiding housing sector

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This entry was posted on Thursday, January 31st, 2008 at 10:52 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.