WASHINGTON Showing that bipartisanship is not impossible in the critically split Congress, a group of Republican and Democratic House members called on the Federal Housing Finance Agency this morning to maintain--not lower--the conforming loan limits for Fannie Mae and Freddie Mac because of the potential harm it would cause the mortgage market.
The group, led by Republican Gary Miller of California, told FHFA Director Edward DeMarco that Congress did not give the FHFA the authority to lower conforming loan limits when it created the agency in 2008. “In fact, we included language in statute explicitly stating that the loan limits could not be reduced,” said Miller in a letter signed by 66 House members.
“Housing prices are on the rise, but lowering the loan limits could put the housing market’s fragile recovery at risk,” wrote the lawmakers.
“Lowering the limits would place taxpayers at greater risk due to a decline in home values, ultimately harming the GSEs’ financial positions. While we need to attract more private capital participation in the mortgage market, a reduction in the loan limit is not the right way to achieve this goal.”
The letter comes a day after numerous lender groups, including CUNA and NAFCU called on DeMarco to retain the current conforming loan limits.
DeMarco has said publicly the FHFA is considering reducing the loan limits.
Currently, the maximum value of a mortgage that Fannie Mae and Freddie Mac can purchase is $417,000. For homes located in high-cost areas where the median home price exceeds $417,000, the loan limit is 115% of that area’s median house price, but cannot exceed $625,500. Congressmen Miller and Sherman authored this high cost area conforming loan limit in 2008. They have also authored legislation to make the higher conforming loan limits permanent.
