Schwarzenegger: Calif. Needs 'Fair Access to Housing Capital'
California Governor Arnold Schwarzenegger called on Congressional leaders Wednesday to raise the conforming loan limit in the state hardest hit by the nation's mortgage meltdown and housing crisis. In a letter sent to U.S. Senate majority leader Christopher J. Dodd, Senate minority leader Mitch McConnell, House of Representives speaker Nancy Pelosi and House minority leader John Boehner, the Calif. governor argued for "fair access to housing capital" and said the current GSE conforming loan limit is disproportionately affecting Californian homeowners. "Raising these limits would do more than anything else to pump badly needed credit back into our housing market and revive our economy," Schwarzenegger said. "It will also help reduce foreclosures and will allow more people to achieve the American Dream with solid, responsible loans.â€? The current conforming lending limit is $417,000; real estate data provider DataQuick reported recently that the median price paid for a home in California during December 2007 was was $402,000, down 2.9 percent from $414,000 for the month before, and down 14.8 percent from $472,000 for December a year ago. The governor said, however, that the conforming limit was well below median housing prices in local high-cost areas, including Los Angeles. "A starter loan in Los Angeles usually puts a buyer outside the GSE loan limit and into the so-called 'jumbo' loan market, a market that sprang largely from a permissive Federal Reserve policy that dropped interest rates dramatically and encouraged widespread jumbo lending," Schwarzenegger wrote in a letter sent to legislators. "That market has now largely disappeared and, where it remains, lenders are requiring expensive and onerous terms from borrowers that in some cases are fully one percentage point higher than GSE terms." Schwarzenegger also met today with construction and building industry leaders to discuss the potential release of billions of dollars in infrastructure bonds; the governor has said he wants to use $29 billion in unallocated funds from a 2006 series of bonds to expedite major infrastructure projects and keep contruction workers employed.