Little mortgage assistance for pricier homes

February 19, 2009 6:36:36 PM PST
If it sounds funny that the median price home in the bay area is now $300,000, it should.

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Companies that track the sales of existing homes say that in January, the median price of a home in the Bay Area was $300,000.

"Yeah,well, what Bay Area are they talking about, that's all I want to know," said Kaye Woods from Kaye Woods Realty.

Woods is a realtor who handles high priced property in San Francisco. She explains low-end of the housing market is selling right now, as investors buy up the bargains. But high end of the property is not selling -- at least not so much.

"I'm just doing research on a $2 million to $3 million, and it's scary it's quite scary right now," said Woods.

On Wednesday, President Barack Obama tried to reassure the nation. He promised to pump hundreds of billions into Fannie Mae and Freddy Mac, the nation's two largest mortgage lenders.

In the Bay Area, where average housing prices are much higher than the sales figures would indicate, mortgages are also much bigger. And the rates on mortgages have two to three percentage points higher than those for conventional loans in most of the rest of the country.

The White House told ABC7 the president's plan only applies to mortgages that conform to Fannie and Freddie. And in the stimulus bill the president signed, is a provision that raises conforming loan amounts for high cost areas.

A spokeswoman for Fannie Mae told ABC7 that for 2009, the conforming loan limit will be $729,000 most of the Bay Area.

Solano County has the loan limit set at $417,000. Napa and Sonoma are in between.

"Given the high value of homes and the price of real estate in the bay area people have some hope of obtaining long term standard well price financing," said James Argo from Real Estate Financial Services.

Argo says there hope, but Fannie and Freddie and the government can't do it alone.

"We also have to have participation in the investment community to say yes, Fannie is going to buy these, we will in turn invest in these and buy them as mortgage backed securities," said Argo.

If investors aren't willing to put up the money, rates will have to go up in order to get them interested.

Argo says because of the sub-prime scandal, investors have been gun shy of any kind of mortgage backed security. The president is working to change that.

  • Fannie Mae and Freddie Mac loan limits for 2009

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