New Stimulus Plan Offers Jumbo Mortgage Help to Homeowners

New York–The proposed U.S. economic stimulus plan announced Thursday will prevent foreclosures and make refinancing easier for mortgage seekers in high-cost markets, CNNMoney.com reports.If passed, the package will increase the dollar amount of the loans Freddie Mac and Fannie Mae are able to purchase. Currently, the government-backed lenders only can guarantee secondary market loans of less than $417,000. Private lenders are happy to offer the larger jumbo mortgages–but, because there is no guaranteed secondary market for the loans, the lenders charge borrowers more for taking on additional risk. The plan suggests raising Freddie Mac and Fannie Mae’s limit to $625,000 for 12 months so that buyers in high-cost regions such as California can refinance or take out new mortgages. Lawmakers hope raising the loan amount cap will encourage activity in some of the nation’s slowest markets, such as Florida, where costly home prices mean mortgages often are more than the current $417,000 government-supported lender limit.