The government on Thursday raised the limits for loans that can be purchased by mortgage companies Fannie Mae and Freddie Mac in more than 220 U.S. cities and counties.
As result of the economic stimulus package signed by President Bush last month, the limits were temporarily raised to a new maximum of $729,750 for the continental United States.
Areas affected range from Flagstaff, Ariz., to Boston to Virginia Beach, Va., and include more than 20 rural areas, according to the Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae and Freddie Mac.
In Utah, several counties now have higher loan limits, including Salt Lake, Summit and Tooele all at the top level of $729,750. Wasatch County has an increased loan maximum of $431,250.
"The biggest impact will be those people with loans over $417,000," said Matthew Prestwich, president of National Mortgage Brokers, a mortgage company in Murray. "They will now be able to qualify for regular conforming loans, which have much better interest rates than non-conforming 'jumbo' loans that had higher rates."
The head of the Utah Association of Mortgage Brokers said the higher loan limits will eventually be an ideal solution for many homeowners who need help.
"For those that have gotten in trouble, there is a light at the end of the tunnel," said David Luna. "If they have over-extended themselves, including those in bankruptcy, the higher loan limits are going to help."
Luna said he expects thousands of Utah families to benefit from the new limits much more than from "our good president's check in the mail."
"These are real benefits that are going to help real families along the Wasatch Front now," he said.
The stimulus bill raised the cap on mortgages that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy or guarantee from the current level of $417,000. Higher limits apply in Alaska, Hawaii, the Virgin Islands and Guam.
The change, designed to provide a lift to the strapped mortgage market, expires Dec. 31, unless Congress decides to make it permanent.
Similarly, the Department of Housing and Urban Development made a similar change for loans backed by the Federal Housing Administration, where limits were raised to as high as $729,750 in expensive areas.