Breaking News...Congress Sends Economic Plan to President Bush...

Congress passed an emergency plan Thursday to stimulate the weak economy by providing rebates to most taxpayers, disabled veterans, the elderly and low-income people. Rebate checks could begin arriving in May based on 2007 tax returns.

The bill also provides tax relief for businesses to make new investments. The measure also temporarily raises the loan limit on Federal Housing Administration (FHA) insured loans and the Fannie Mae and Freddie Mac conforming loan limit up to $729,750 in high cost real estate markets like California and the San Francisco Bay Area.

The Senate acted after a week of political maneuvering with an 81-16 vote. The White House said Bush would sign the bill sometime next week. The package was the result of a rare bi-partisan cooperative effort.

There are concerns that by raising the conforming loan limits for Fannie Mae and Freddie Mac that the larger loans will place an additional burden on these Government Sponsored Entities (GSE's) which may hinder their ability to cover larger loan losses.

This additional potential burden may have a negative effect on loan and appraisal underwriting requirements in declining real estate market like California which could increase the cost of home loan financing and down payment requirements.

The conforming loan limit increases will apply to loans originated from July 31, 2007 and will expire on December 31, 2008. The limited time frame for the temporary loan limit increase should create a sense of urgency in slow real estate markets to encourage home buyers to take action and for homeowners to take advantage of refinancing into a more affordable loan.

Stay tuned to see what happens next after Bush signs the bill.