Although he had once been adamant that the housing market — while troubled — was recovering nicely, Mortgage Bankers Association president (and former FHA commissioner) David Stevens has changed his mind. He now supports the continuation of higher loan limits at Fannie Mae, Freddie Mac, and the FHA, despite the fact that the official MBA stand is that those limits should be reduced as scheduled on October 1.
We’re glad to hear it. It’s NAR’s and VAR’s position that lowering those limits will only make it harder for people to buy homes. If Fannie or Freddie will only guarantee a loan up to $274,850 in Essex County, for example (instead of the current $375,000 limit), how much extra will a buyer have to pay to get a mortgage?
In a statement he released today, Stevens made it clear that, “[t]he temporary loan limits authorized by Congress have benefited consumers and the housing market during what has been a turbulent period for our nation’s economy.” He added, crucially, “That decline is not over yet.”
He told CNBC that, while he’s still generally bullish about the market, “[W]e’ve seen clearly an impact to the housing market which is not solely a result of the U.S. economy. It’s brought on by general uncertainties: Oil prices spiked for a while, which hit confidence, there were a lot of impacts both domestically and internationally.” And the MBA’s position is subject to change “for market conditions.”
Those market conditions mean that private capital is still hesitating on the sidelines, and the government’s share of the secondary mortgage market is too large. And, said Stevens, “If FHA is still too big, it is the sign of an unhealthy system, but it doesn’t mean pulling back is the right answer. We must continue providing support.”
His bottom line on higher loan limits? “I think the view right now that I have is that this is a relatively inexpensive initiative that could support the housing market at a time when pulling back makes no sense.”