Raising conforming loan limits won't make much difference

I’m republishing this item to fix an error that was pointed out to me by Alison Fitzgerald of Bloomberg. (Thanks, Alison.) My error was to say that the increase in loan limits wouldn’t take effect until July 31. It’s actually retroactive to July 1, 2007. That means that banks will be able to sell lots of existing jumbo loans that are clogging up their books to securitizers, giving them the capacity to make new loans. It’s an important difference, although I think the overall point of this item still stands.

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