Trade Groups Urge Regulator to Hold GSE Loan Limits Steady

March 24, 2014
American Banker 
mortgage lending news
Housing and lending interests are petitioning the Federal Housing Finance Agency not to raise the loan limit for Fannie Mae- and Freddie Mac-insured mortgages, as recommended by former acting director Edward DeMarco last year. His proposal, which would have lowered the ceiling to $400,000 from $417,000 on conforming loans and to $600,000 from $625,500 for high-cost mortgages, has been in limbo since Mel Watt was installed as the agency's new director in December.

On March 20, 10 industry groups -- including the National Association of Realtors, Asian Real Estate Association of America, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, and National Community Reinvestment Coalition -- sent a letter urging the FHFA to let the current loan limits remain in place for the time being. "After we learn how Congress will reform the [government-sponsored enterprises]; after the marketplace has seen how courts will construe the extent of liability under the ability-to-repay regulation; and after lenders react to the untested litigation risk, then revisiting the GSEs' loan limits may be more appropriate," the letter suggested.

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