Here is my opinion on the conforming loan limits. I would actually support it IF THE FOLLOWING WERE TRUE:
-The lenders / investors were forced to eat the difference from the workout (Loan value versus new appraisal value) and take the “CramDown” as Tanta likes to call it.
-The new Gov backed principal balance would need to be less than the Upper Conforming Limit.
Yes, a lot of FBs would get to stay in their stucco box if that is truly what they want to do (otherwise, just walk away right?). However, this would cause a very fast decline in home prices to a market value while keeping FBs happy.
