The maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac is staying the same, at least for the moment.
The Federal Housing Finance Agency announced today that the maximum loan limits for Fannie and Freddie will remain at $417,000 for most areas of the country and up to $625,500 in more expensive markets. The announcement comes after months of industry protest over Acting FHFA Director Edward DeMarco’s announcement that he would lower the loan limits.
FHFA could still lower the loan limits in the middle of next year. DeMarco said last month that any change in the loan limits wouldn’t come until spring of 2014 at the earliest, and that the agency would give at least six months’ notice before making any changes.
But many mortgage professioanls don’t want to see the limits lowered at all. More than a dozen mortgage and housing industry groups have gone on record opposing the plan, and several sent an Oct. 8 joint letter to DeMarco urging him to abandon the idea.
“We believe such changes at this time would have a very disruptive impact on the availability of affordable housing credit, on our housing recovery and our economy as a whole. Not only is lowering loan limits bad for housing, we question to what extent FHFA’s authority would allow for such a change,” the letter stated.
Members of Congress aren’t so hot about the idea, either. Sixty-six House members signed an Oct. 10 letter to DeMarco slamming the plan.
“Such action by a single regulator would serve only to further tighten credit availability and thereby erode progress in our fragile housing recovery,” the letter stated. “Currently, homeownership rates are at an historic 18-year low. Mortgage credit is virtually nonexistent for middle class Americans with less than stellar credit. Unless borrowers have a credit score of 760, conventional mortgage financing will simply be out of reach.”
Members of Congress also questioned DeMarco’s authority to lower the limits in the first place, but DeMarco has remained adamant that he has the authority and intends to exercise it.
All that could change, however, if Rep. Mel Watt (D-N.C.), President Obama’s nominee to head the FHFA, is confirmed. Many observers think Watt would focus the agency more on helping struggling homeowners, and would be less inclined to lower conforming loan limits than DeMarco.
Watt’s confirmation was initially blocked by Senate Republicans, but a recent rule change means he now requires only 51 votes to be confirmed.