Economic Stimulus Plan To Add Liquidity To Markets

Published February 18, 2008, 1:00 a.m. EST

Updated August 27, 2020, 1:24 a.m. EDT

1 Min Read

WASHINGTON - The economic stimulus packaged passed by Congress will add some much-needed liquidity in high-priced mortgage markets by allowing Fannie Mae and Freddie Mac to buy larger mortgages from credit unions and banks.

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The bill raises the limits on so-called conforming loans, those the two secondary market giants can buy, from the current $417,000 to 125% of a metropolitan area’s median home price, with a ceiling of $729,500, for the rest of the year.

It also raises the limits on Federal Housing Authority loans from $362,000, also to 125% of the metro area’s median area home price.

Many credit unions in hard-hit California markets see the move as a way to add liquidity to the market and to move more of their mortgages off their books by selling them to Fannie or Freddie.

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