The economic stimulus package announced last Thursday has most people buzzing about the tax rebate. However, the Bush Administration and House leaders also agreed on something else: temporarily raising the conforming loan limit. The Seattle Times reports that this conforming loan limit may be raised, temporarily — and only in certain markets — from $417,000 to more than $700,000.

Conforming loan limit

The conforming loan limit is what is considered a "conventional loan" in terms of amount. Anything above that is considered a "jumbo loan." In order to make it possible for more people to get loans that Fannie Mae and Freddie Mac (the quasi-governmental loan buyers) to purchase, the conforming loan limit has been raised. Leaders hope this will help stimulate the housing market.

But it may just encourage more irresponsible lending.