Real estate professionals, including some local ones, are pushing the federal government to declare California a “high-cost” state to ease the home foreclosure crisis that has hit the Vallejo area especially hard.
“Our association has been working on this for a long time,” said California Association of Mortgage Brokers member Dale DiGennaro of Napa. “We got a bill as far as the Senate last year and it died there. We hope it passes this time.”
The designation would raise the federal mortgage loan limit to something near that needed to buy a house in California, DiGennaro said.
“This would increase the loan limits to a more reasonable number,” he said.
The House of Representatives passed the Federal Housing Finance Reform Act of 2007 in May, giving California the high-cost designation now enjoyed only by Alaska, Hawaii, Puerto Rico and Guam, DiGennaro said. It would allow limits on government-backed loans like FHA, Fannie Mae and Freddie Mac to rise from $417,000 to $625,000.
The median home price in Vallejo in August was about $415,000; it was about $515,000 in Benicia and about $430,000 countywide, said Solano Association of Realtors president Jeff Dennis. The Statewide median price is about $589,000, according to the mortgage brokers association.
“This would allow more people to qualify for lower-interest loans, attracting more people to the real estate market,” Dennis said. This could help jump-start the flagging industry, he said.
The House also passed the Expanding American Homeownership Act of 2007 in September, which would create access to FHA loans for borrowers with little down payment money, dinged credit or unusual employment situations, according to the mortgage association statement.
“I can’t imagine anyone would object to making loans more affordable,” Dennis said. “I just don’t see a downside to it.”
DiGennaro said he thinks the designation “would go a long way toward turning the crisis around.”
“We’ve needed this for a long time in California, and the problem is exaggerated now, because the liquidity in the market place is almost gone,” he said.
By By RACHEL RASKIN-ZRIHEN, Times-Herald
