Time Is Of The Essence!

Another bump in the road for home sales recovery

June 14th, 2011 @ 7:30am

By Paul Nelson

SALT LAKE CITY -- At the end of September, Fannie Mae and Freddie Mac will no longer back home loans in Utah larger than $417,000.

Mortgage analyst Al Bingham says Fannie and Freddie were asked to back luxury loans when the real estate market started its downfall, but that's being phased out.
"Other than that, Fannie Mae and Freddie Mac have no authorization to purchase loans above that limit because Congress has mandated it," Bingham explained.

In the short term, this could lead to more unsold homes in the market, bringing prices down.

He said, in the short term, this could lead to more unsold homes in the market, bringing prices down.

"You have homes that maybe were worth $400,000 that are now being priced around $250,000 or $275,000. Now, they've become direct competition for those homes in the $250,000 to $275,000 range that will now come down in the $200,000 range," he said.
Even though the recovery may be difficult, Bingham said there is hope.
"In having the government exit some of these housing programs, even though we may have a direct consequence or a direct problem right off the bat, it actually could be healthy down the road," Bingham said.
He added that, eventually, the private sector will have to take more control of the mortgage industry. He equates it to a child learning to swim who takes the water wings off for the first time.
"One of the bigger problems that we're having, why people can't get home loans right now, is the over regulation of the lending industry," Bingham said.