Roughly 63 members of the House of Representatives have signed onto a letter asking the Federal Housing Finance Agency (FHFA) to delay its lowering of the loan limit for government-sponsored enterprises (GSEs) scheduled to take effect January, according to an article from Inside Mortgage Finance.
Mortgage industry advisors and lobbyists are hoping to delay the implementation date for lower loan limits into the second quarter of 2014, IMR reports.
The Mortgage Bankers Association (MBA) sent a letter Friday to the FHFA, citing concerns that reducing conforming loan limits for Fannie Mae and Freddie Mac would be “disruptive” to the economy and the housing recovery.
“As we have discussed previously, a reduction in loan limits at this time would be disruptive to the ongoing housing recovery and economy as a whole,” wrote MBA President and CEO David Stevens. “While the housing market has improved in many areas of the country, the recovery remains fragile and uneven.”
Additionally, the regulatory changes slated for January could tighten credit for “thousands of families.”
“Many potential homeowners remain on the sidelines unable to purchase a home or refinance their mortgage due to persistently restrictive credit standards resulting from regulatory and market uncertainty,” Stevens said.
Advocates argue that lowering GSE loan limits would also undermine new mortgage rules from the Consumer Financial Protection Bureau (CFPB), such as the ability-to-repay and qualified mortgage requirements.
Instead, MBA urged the FHFA to monitor the impact of the CFPB rules and reassess conditions six months after full implementation to determine the industry’s capacity to meet credit needs in the mortgage market.
“Additional change and uncertainty run the risk of reversing the progress made thus far in the housing recovery,” Stevens said. “Now is not the appropriate time to move the limits down.”
Written by Jason Oliva