US Rep Moves To Permanently Up Fannie, Freddie Loan Limits
January 15 2009 - 5:40PM
Dow Jones News
A U.S. House lawmaker introduced legislation to restore last
year's higher limits on the size of mortgage loans Fannie Mae (FNM)
and Freddie Mac (FRE) can buy in certain costly markets.
Economic stimulus legislation passed into law last year
temporarily lifted the loan limits to nearly $730,000 from $417,000
through the end of 2008. The limits dropped to $625,500 from
$729,750 on January 1.
Rep. Gary Miller, Republican of California, introduced
legislation Thursday to reinstate the higher limits, arguing the
move was crucial for restoring the affordability of mortgages in
some regions of the country and stabilizing the housing market.
"As the crisis in housing markets continues, the availability of
affordable mortgage loans remains essential to alleviating the
credit crunch and stabilizing the U.S. mortgage market," Miller
said in a statement.
The Jan. 1 drop in the high-cost limit has pushed up rates on
larger mortgages that no longer qualify for purchase by Fannie or
Freddie. Interest rates on "conforming" loans - those that can be
sold to Fannie or Freddie - are much lower than on larger loans,
known as "jumbos."
Lawmakers representing costly home markets along the coasts have
vowed to attach language restoring last year's higher limits to
economic stimulus legislation.
The National Association of Realtors, the Mortgage Bankers
Association and the National Association of Home Builders have been
lobbying for months to make last year's higher limits
permanent.
Under a new federal housing law, the higher-cost area cap is set
at 150% of the national loan limit, which is determined annually by
the Federal Housing Finance Agency.
Last year, the agency said it would keep the national cap at
$417,000 for 2009, triggering a drop in the limit for more
expensive housing markets to $625,500 from nearly $730,000.
The prevailing loan limits apply to all loans purchased or
guaranteed by Fannie or Freddie in 2009, except for loans
originated while the higher 2008 loan limits were in effect. For
those loans, the roughly $730,000 high-cost limit will apply.
-Jessica Holzer, Dow Jones Newswires; 202-862-9228;
jessica.holzer@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.