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Expiration of 2008 program to see housing expenses rise

Source: Informa Research Services

(10/6/2011) The first day of October saw costs and expenses germane to housing increase in the more expensive U.S. markets, according to Reuters.

Down payments are likely to rise like borrowing costs as a result of the expiration of raised limits on the size of mortgages purchased or insured by the U.S. government. The movement is a result of action in 2008, which saw an increase to supply liquidity to the market for mortgages that were damaged by the meltdown in subprime mortgages.

Regions including the nation's capital, California and New York City will see the maximum eligible amount for mortgages drop from $729,750 to $625,500 where the government can provide support. Those regions are among the U.S. most expensive real estate markets.

Residents of regions with more competitive real estate markets should review the online table of mortgages. Because costs are rising, it is more important than ever to secure the lowest rate on your mortgage.

Known as the confirming loan limit, the maximum is a device used to gauge what is the top sized mortgage that the Federal Housing Administration, Fannie Make and Freddie Mac either may acquire or guarantee. The move is an effort to enhance liquidity to the mortgage market by pulling the mortgages away from the business routine of banks and other financial institutions. Thus, the financial institutions may offer additional loans.

However, some analysts told the news service that the expiration only will affect a very small portion of the market, like no more than 3%. Yet since the market for housing already is debilitated, any reduction whatsoever is likely to be damaging.

"Why do any damage at all when the housing market is this fragile?" said Mark Willis, a research fellow at New York University's Furman Center for Real Estate and Urban Policy. "We're not debating the right levels for these loan limits, but the question is why do anything at this moment to weaken what is already an unsteady market."

The Baltimore Sun reports housing officials from the state of Maryland were working feverishly this week to complete as many applications as possible by close of business on Friday as part of an effort to avail as much as $57 million in emergency loan funding for people under the glare of foreclosure.

As of Wednesday, the state's Emergency Mortgage Assistance program had granted approval for $46.3 million in loan money for 1,206 property owners. The newspaper reported that employees of the Housing and Community Development office were devoting weekends and evenings to pushing applications through the process.