"Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies, will be allowed to buy loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008, an increase over the current $417,000 loan limit, a move that could help struggling homeowners to refinance large mortgages at a lower interest rate. It will also allow the Federal Housing Administration to insure loans as high as $729,750 in expensive markets."
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahxT2LhBjCvY&refer=home
Can you believe this? It's like watching Brittany getting let out of the hospital 2 days into her 14 day hospital stay for mental illness. Changing the limits are going to throw the valuations of the previously securities mortgages into chaos. It's currently almost impossible to judge the value of the debt based security, changing the limits will make it impossible.
How can you, as a debt purchaser, determine what type of mortgage that is being purchased?
Placing this type of confusion into the debt market is only going to decrease the amount of available credit, accelerating the problems we already have. I never thought the financial markets would be so out of control, like a drug addict trying to restart something they know is going to fail.
Thanks to the love of my life for showing catching this little doozy.
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