WASHINGTON CUNA and NAFCU and a broad base of lender groups called on the Federal Housing Finance Agency to retain its conforming loan limits for mortgage sold to Fannie Mae and Freddie Mac, saying lower limits would jeopardize the fragile housing recovery.
“We believe such changes at this time would have a very disruptive impact on the availability of affordable housing credit, on our housing recovery and our economy as a whole,” said the group in a letter yesterday to Edward DeMarco, director of the Fannie and Freddie regulator.
The lender groups also questioned the regulator’s authority to lower the conforming loan limits, which sets a ceiling for the mortgages Fannie and Freddie will buy from credit unions and banks.
The letter comes as the FHFA is considering lowering the conforming loan limit to $400,000, at a time when Fannie and Freddie buy more than 90% of all single-family mortgages originated by credit unions and banks. The current limit is $417,000, though it ranges as high as $625,500 in more expensive markets, like Washington, D.C., California and the New York City metropolitan area -- and up to $721,050 in Hawaii.
According to the groups, a reduction of the conforming loan limit to $400,000 would have impacted nearly 154,000 borrowers in 2012, many of whom were in markets still in recovery. “Additionally,” they wrote, “many of these borrowers would not have qualified under the low loan-to-value and tight credit standards currently required by the private market.”
Lowering the loan limits, according to the lenders, further restricts liquidity and makes mortgages more expensive for households nationwide.
Joining CUNA and NAFCU on the letter are: the Mortgage Bankers Association; American Financial Services Association ; National Association of Home Builders; National Association of REALTORS; Coalition of US Mortgage Insurers; Community Home Lenders Association; and Community Mortgage Lenders of America.
