The changes would be especially helpful to homebuyers in high-cost areas such as the Napa, Sonoma, Marin and other bay area counties.

In the fourth quarter of 2007, the median single-family home sold for $521,441 in Sonoma County, $604,500 in Napa and more than $1 million in Marin, well above government loan limits. Buyers typically make up the difference through privately backed, second mortgages, but those “non-conforming” loans have become more expensive and difficult to obtain because of recent trouble in the mortgage markets.

Those financing troubles have hurt home sales. In Sonoma County, sales of homes between $450,000 and $600,000 – most of them needing non-conforming loans – dropped 61 percent in the fourth quarter of 2007, compared with the same quarter of 2006. Sales of homes between $300,000 and $450,000 – most of them fundable with conforming loans – dropped less than 2 percent.

Source: North Bay Business Journal