This would allow the Fannies and Freddie to buy larger mortgages from lenders. Resulting in putting that money back in the hands of banks. This financial stimulus should help increase the capital ratios and generally put lenders on a stronger footing.
Who Does It Benefit
1. Lenders who need the capital. This is in everyones interest, since we do want that neighborhood bank to be there when we need it.
2. New home buyers because the lenders would be able to resell larger loans and have money to loan out again...perhaps to you
3. The owners of these jumbo loans would see a lower interest rate. NAR thinks as much as $3000-$5000 a year.
4. Real Estate agents because lenders might be a little more willing to lend and the savings might keep some people in their homes and supply off the marketplace.
5. Most especially areas that have large numbers of jumbo loans. eg; New York California parts of Florida have an out sized number of these loans.
According to Freddie Mac the sub prime delinquency rate is 10x higher than the owners of prime conventional loans. The sub prime end of the market needs help fast....lets not forget them.
