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Feds lower mortgage limits in Sonoma County


Beginning Saturday, the federal government will withdraw some of its support for the real estate market by scaling back the size of home loans it will guarantee.

The lower loan limits are already making it more expensive for buyers to get mortgages on upscale homes in Sonoma County.

The new rules affect a relatively small segment of Sonoma County’s housing market — mostly homes between $575,000 and $800,000, according to local mortgage brokers. Such properties comprised roughly 10 percent of single-family home sales so far this year.

But buyers of such homes now need to seek jumbo loans, which require them to provide bigger downpayments, accept a higher interest rate and pay more in upfront loan costs.

“Something like this is certainly not helping,” said Norm Valmassoi, a loan officer at First Priority Financial in Petaluma.

Three years ago, Congress attempted to bolster the housing market by increasing the maximum size of loans that can be purchased or guaranteed by the Federal Housing Administration, Fannie Mae and Freddie Mac. But lawmakers, some citing concerns about federal budget deficits, declined to extend the higher loan limits this year.

Although the change does not officially take place until Saturday, lenders already are using the lower limits when processing new loan applications, Valmassoi said.

Under the old limits, buyers could get federally guaranteed loans of up to $662,500 in Sonoma County and $512,500 in Mendocino County. Lake County received a maximum amount of $401,250 for FHA loans only.

The new maximum limit for Sonoma County is $520,950. Lake County’s limit for FHA loans declined to $271,050. Mendocino County’s limit dropped to $373,750 for FHA loans and $417,000 for other federally backed loans.

Kris Anderson, a senior loan consultant with Allstate Mortgage Company in Santa Rosa, said sellers in Sonoma County with homes priced at or above $600,000 may have trouble finding buyers with enough cash to make required downpayments of up to 30 percent of the sales price.

“For those who do have the downpayment,” Anderson said, “it’s going to be a buyers market.”

Otto Kobler, branch manager for Summit Funding in Santa Rosa, said some lenders are responding with what used to be called “piggy-back loans,” essentially a second home-equity loan to cover the difference between the federally-backed first mortgage.

“This will be a new alternative,” he said.

The California Association of Realtors lobbied to keep the higher loan limits. Even so, real estate agents differ on the impact of the new rules.

John Duran, president of the Santa Rosa chapter of the North Bay Association of Realtors, said that amid today’s historically low interest rates, the higher-cost loans won’t prevent sales once more people believe it makes financial sense to buy homes.

“It’s all about confidence,” Duran said. “When people are confident, these little things won’t keep them from purchasing. And when they’re not confident, any little thing will keep them from purchasing.”

5 Responses to “Feds lower mortgage limits in Sonoma County”

  1. good one says:

    To social dis ease, You forgot one of the key players in foiling the Green Building Retro Fit requirements: Your local Board of Realtors! If anyone puts their money where their mouths are, it’s your Realtor. Their organization has been a propoent of individual property rights for years. I know that it seems a surprise, but it is true!

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  2. Jim says:

    This will help the fledgling housing industry.

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  3. Money Grubber says:

    Finance experts are already explaining that today’s rock bottom interest rates on mortgages are actually not that sweet of a deal.

    The reason?

    When you factor in falling home prices, which are expected to continue falling, that rock bottom loan interest they are offering actually works out to roughly a 10% or 11% loan. NOT a good deal at all.

    The era of residential house appreciate are over. Anyone who says different is trying to sell you something.

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  4. Social Dis-Ease says:

    First it was the ‘Green Building Retrofit Program’, (were it not for the efforts of Santa Rosa Neighborhood Coalition this would be a done deal!)
    the ‘PACE’ program would have slowed the pace of the housing market through a mandatory 10% accomadation in LTV.
    Then the anouncement that the county would no longer be maintaining roads outside ‘Transportation Corridors’/
    Smart Growth human settlements.
    Our ICLEI club members have plans to not allow for any development outside same.
    Now this.
    Search ‘The Wildlands Project’, it is actually the most direct way to understand the goals of Agenda 21/
    Sustainable Development/Smart/ICLEI,etc..

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  5. Kay Tokerud says:

    Another shot against private property ownership. It appears that the end goal will be full-blown government controlled housing. Why else hasn’t the federal government done anything to help the beleaguered housing market? The One Bay Area plan seeks to only allow housing to be built in very small areas called Priority Development Areas along mass transit routes. The County has a Priority Roads Network, you know, the only roads they will be maintaining.

    Private home ownership in suburban and rural areas is under attack with every new policy they implement. It’s all about smartgrowth, the UN Agenda 21 plan to get us packed into ‘human habitations’ or ‘transit villages’ as they like to call them. As they continue to devalue our properties, diminish services to outlying areas, and impose new fees and regulations on property owners, it will be much easier and cheaper for the government to acquire property and put it into conservation areas and land trusts that will be off limits to people.

    It’s all about having more government control over every aspect of our lives and it’s happening now. Get informed, get active, and maybe we can stop this before it’s too late.

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