It looks bad for fans of the higher loan limits for the government-sponsored enterprises, but that hasn't stopped housing, realty and mortgage trade groups from promoting the issue.
Lobbyists say the National Association of Realtors, National Association of Home Builders, and Mortgage Bankers Association are making a full court press for a quick legislative fix.
If the loan limit drops as expected, roughly $30 billion in jumbo loans would no longer be considered GSE jumbos and would potentially be funded by conduits itching to enter the nonconforming space. For consumers, the biggest question would be how much more they will pay for credit.
Rep. Bill Posey, R-Fla., is making a last-minute push to stop a loan limit reduction in non-high-cost areas slated to go into effect Oct. 1.
His bill would halt a change in the formula that determines the limit at the county level in non-high-cost areas, but it would not delay a drop in the maximum loan limit of $729,750, to $625,500, in high-cost areas,
The limit is set at 125% of the local area median home price and will decline to 115% come Oct. 1 unless Congress acts quickly.
According to the NAR, lending limits will decline in 593 counties in 42 states with the change to 115% of the local area median home price, from 125%.
