Forget the Super Bowl. Forget the upcoming elections. There's one subject that has everybody's attention riveted on Capitol Hill right now: The Economic Stimulus Package. What's in it? What's been left out? When do we start cashing our rebate checks?

And, of special interest to us as Realty Times: What will the package do for housing?

Well, the results aren't in quite yet, because the House and Senate still have to work out the differences between their stimulus plans. At the moment, though, it looks like they'll beat the deadline of February 15 for having a final bill on the President's desk for signature.

What will the stimulus plan do for housing? It could be very important. Both the House and the Senate agree that we need to raise the limits on the maximum size mortgages Fannie Mae and Freddie Mac can buy, and we need to do the same for FHA mortgage insurance.

Why? Because there are millions of home owners and potential home buyers out there in places like California, New England, New York, Florida and Washington D.C. where the Fannie-Freddie-and FHA limits make no sense at all. They're too low.

For example, the MEDIAN home price in the state of California is well over $500,000. In the San Francisco area, it's closer to three quarters of a million dollars. But Fannie Mae and Freddie Mac can't buy loans larger than $417,000 and FHA is stuck below $363,000.

Yet these three programs offer the safest, lowest-cost, fixed-rate loan options anywhere in the market. They are just what's needed to stimulate home buyers to get off the sidelines to pick up the reduced-cost houses -- both new and resale -- that are clogging so many local real estate markets.

Under the stimulus plan, the maximum mortgages for all three programs will jump to 125 percent of a local area's median house price-with a top limit just under $730,000.

That's huge.

One economist in Washington estimates this change alone -- even if it's in place for just 12 months -- could stimulate over a quarter of a million home purchases, plus help thousands of financially-stressed owners facing payment resets on jumbo mortgages to refinance into saner, safer fixed rate alternatives.

From a real estate perspective, the upcoming stimulus could be precisely the economic jolt the doctor ordered -- assuming the higher limits go into effect no later than this Spring.

Published: February 1, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.