BILL NUMBER: SJR 21	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Machado
   (Principal coauthors: Senators Corbett, Perata, and Runner)
   (Principal coauthor: Assembly Member Lieu)

                        JANUARY 28, 2008

   Relative to mortgage loans.


	LEGISLATIVE COUNSEL'S DIGEST


   SJR 21, as introduced, Machado. Mortgage loans: conforming loan
limit.
   This measure would respectfully memorialize the President and
Congress of the United States to enact legislation that would
increase the federal conforming loan limit, as specified.
   Fiscal committee: no.



   WHEREAS, The federal conforming mortgage loan limit, currently set
at four hundred seventeen thousand dollars ($417,000), is the
maximum amount of debt that may be guaranteed or purchased by Fannie
Mae and Freddie Mac, collectively known as federal
government-sponsored enterprises (GSEs); and
   WHEREAS, The conforming loan limit is greater than four hundred
seventeen thousand dollars ($417,000) in selected high-cost states,
such as Alaska and Hawaii; however, California is not considered a
high-cost state, despite a median housing price of four hundred
eighty-eight thousand six hundred forty dollars ($488,640) in
November of 2007; and
   WHEREAS, A mortgage whose value exceeds the conforming loan limit
is called a jumbo mortgage; and
   WHEREAS, Jumbo mortgages have interest rates that exceed the rates
for conforming mortgage loans by record levels and now cost
approximately one full percentage point more than conforming loans on
average; and
   WHEREAS, This cost difference imposes an added financial burden on
Californians seeking to obtain jumbo loans; and
   WHEREAS, Upheaval in global credit markets has drastically reduced
liquidity throughout the mortgage industry making it extremely
difficult for existing homeowners to refinance out of unaffordable
mortgages and for prospective new homeowners to obtain mortgage
loans; and
   WHEREAS, Fannie Mae and Freddie Mac have been able to partially
mitigate the liquidity crisis in the conforming loan market by
purchasing and guaranteeing conforming mortgage loans, and by helping
to fill the large funding gap left by the departure of private
investors from the United States mortgage markets; and
   WHEREAS, The liquidity crunch has hit the jumbo mortgage market
very hard because the private secondary market for jumbo loans has
evaporated and Fannie Mae and Freddie Mac are unable to purchase or
guarantee loans that exceed the conforming loan limit; and
   WHEREAS, Over 50 percent of California homeowners and homebuyers
now lack access to a mortgage loan that may be purchased or secured
by Fannie Mae or Freddie Mac because their loans exceed the
conforming loan limit cap; and
   WHEREAS, The loan limits for the Federal Housing Administration
(FHA) and Department of Veterans Affairs (VA) mortgages are tied to
the conforming loan limit; and
   WHEREAS, Many California borrowers are ineligible for FHA or VA
mortgages, including foreclosure rescue products like FHA-secure
loans, because of the loan limit caps on those loans; and
   WHEREAS, California's FHA loan limits currently range from two
hundred thousand one hundred sixty dollars ($200,160) to three
hundred sixty-two thousand seven hundred ninety dollars ($362,790),
far below California's median home price; and
   WHEREAS, California's default and foreclosure levels reached their
highest levels ever recorded during 2007, when 254,824 notices of
default and 84,375 foreclosure sale notices were filed; and
   WHEREAS, No single issue is affecting California's economy more
than our depressed housing market; and
   WHEREAS, California's housing prices are falling dramatically in
several markets across the state, eroding by nearly 17 percent
annually in the Riverside-San Bernardino-Ontario metropolitan
statistical area, falling over 13 percent in the San
Diego-Carlsbad-San Marcos and Los Angeles-Long Beach-Santa Ana areas,
and falling by nearly 13 percent in the Oakland-Fremont-Hayward
area; and
   WHEREAS, Increasing the GSE conforming loan limit, thereby
triggering an increase in the FHA and VA loan limits, would help
restore liquidity to the market for mortgage loans sought by
Californians and could help some California borrowers avoid
foreclosure by increasing the number of available refinancing
options; now, therefore, be it
   Resolved by the Senate and the Assembly of the State of
California, jointly, That the Legislature respectfully memorializes
the Congress of the United States to enact, and the President of the
United States to sign, an immediate increase in the conforming loan
limit as part of the economic stimulus package being discussed by
congressional leaders and the President; and be it further
   Resolved, That the Secretary of the Senate transmit copies of this
resolution to the President and Vice President of the United States,
to the Speaker of the House of Representatives, to the Majority
Leader of the Senate, and to each Senator and Representative from
California in the Congress of the United States.