Conforming loan limits remain a topic of pursuit among industry groups in Washington and at least one top Democratic representative believes there is a good chance the loan limits will remain at their current level, and will receive White House support.
Last week, Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee told the Wall Street Journal he believes the Obama administration will support keeping the current high level of loan limits that can receive government backing. He also told the WSJ he believes many House Republicans will support doing so, given current housing market concerns.
“I think there’s a very real chance they’ll get extended,” Rep. Frank told the WSJ.
In another statement of support, the Mortgage Bankers Association sent a letter to Congress and the Senate sent late last week, stressing the importance of loan limits and urged the governing bodies to support an extension of higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration through at least the end of 2012.
The letter was signed by MBA President and CEO David Stevens, who wrote on behalf of the association.
“The 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,” Stevens wrote. “That decline is not over yet.”
The higher loan limits, set to expire on or before October 1, were raised in 2008 as an effort toward economic stimulus. Because the economy has yet to see a marked rebound, proponents of the loan limit extension say, more time is needed under the current limits.
“Until there are signs of sustained strength in the nation’s housing sector, and in light of the continuing weakness in the secondary market, MBA urges Congress to ensure Fannie Mae, Freddie Mac and FHA can continue providing capital to support loans to moderate and middle income families across the nation,” Stevens wrote in the MBA letter.
The future loan limits for reverse mortgages are also to be determined; HECM loan limits are set to expire on of before October 1, with the loan limits currently “under review,” according to the Department of Housing and Urban Development. Lenders in areas of high home values say they will see a substantial decrease in loan volume when the loan limits fall back to their pre-recession levels.
A bill introduced by several state representatives earlier this month urged an extension of the loan limits until October 1, 2013.
“With so much at stake for American families, inaction is not an option,” Rep. Gary Ackerman (D-N.Y.), one of the bill’s authors, said in a statement Friday. Extending the limits will help “thousands of qualified homebuyers and maintain the affordability and availability of home loans across the nation.”
View the MBA letter.
Written by Elizabeth Ecker