Perhaps the Most Important Item in the Stimulus Package

The package proposes raising the conforming loan limit (the largest loan amount eligible for Fannie/Freddie purchase) by as much as 75 percent in some markets. The current jumbo-conforming spreads in Washington are here.

A person with a $500,000 mortgage would find an extra $4,000-$5,000 in her pocket before tax if she could refinance out of a recent jumbo into a conforming mortgage. This is much larger than the proposed tax rebate, and would also be permanent. The downside for consumption is that investors in jumbo loans would see their investment incomes fall, but still...