The Federal Housing Finance Agency is requesting public comment on a plan to gradually reduce the maximum size of loans that Fannie Mae and Freddie Mac can purchase from mortgage lenders.

The current loan limits are $417,000 nationwide and $625,000 in high-cost areas. The FHFA is considering whether to gradually reduce the limits to encourage private capital back into the mortgage market and limit taxpayer exposure to losses.

The plan being contemplated would reduce loan limits by 4% to $400,000 for most purchases and $600,000 in high-cost areas. No final decision will be made until the comments are reviewed, the FHFA said in a press release.

The FHFA also is seeking input on whether six months' advance notice is enough time to implement the changes or whether more time is needed to minimize market disruptions. No changes will be made on loans originated before Oct. 1, 2014, the FHFA said.

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