Dec 02, 2013
FHFA won’t lower conforming loan limits; NAR signals approval
02 Dec 2013
Posted by Andrew Kantor
Back in September, the Wall Street Journal reported that Fannie Mae and Freddie Mac were going to reduce the maximum value of home mortgages they were willing to back.
The two government-sponsored agencies — both run by the Federal Housing Finance Agency — were expected to reduce the largest loans they were willing to back from the current $417,000 (in most places) or $625,500 (in some expensive markets).
But — at the urging of NAR and other groups,who were fearful the reduced government backing would slow the still-recovering housing market — in October the FHFA signaled that it was not planning to reduce those limits. And on November 26, FHFA Acting Director Edward DeMarco confirmed in a press release that the loan limits would not be changed in 2014.
The decision to keep loan limits at their current level was motivated in part by the desire to give the mortgage industry time to adjust to a wave of new mortgage rules, DeMarco said in October. He added that the agency would offer at least six months’ advance notice before making changes to the loan limit.
More than 90 percent of new mortgages are backed by the government through Fannie and Freddie.