With Congress expected to consider a Continuing Resolution to fund government operations until it returns in November this week, the extension of higher loan limits for the Federal Housing Administration, Fannie Mae, and Freddie Mac remain up in the air.
“These limits continue to be a key component of our economic recovery and should be extended until there are signs of sustained strength in the nation’s housing markets,” said the Mortgage Bankers Association in a statement. “If the loan limits are allowed expire at the end of the year, it will negatively impact nearly every community in the country.”
Both the House of Representatives and the Senate Appropriations Committee have approved bills that extend the higher conforming loan limits through September 30, 2011. However, an extension to the end of 2011 is important in order to synchronize with the statutory requirement that loan limits be set on an annual basis.
The loan limits were temporarily increased beyond the conforming loan limit as part of the Economic Stimulus Package in 2008, which included raising the HECM loan limits to $625,500.
According to our sources in Washington, there is some opposition to extending the limits but they’re confident it will be resolved. Without a resolution, the HECM loan limit would likely fall from $625,500 to $417,000 next year.