Mortgage Bankers Want Agencies' Loan Cap Raised
Idea Gets Cool Reception from HUD, Thrifts
DALLAS -- At a time when bankers are being pressured to boost their lending to poor people, the new president of the Mortgage Bankers Association of America called for secondary market agencies to buy bigger home loans from lenders.
The proposal drew an icy response from the Bush administration, a key Senate staff member, and a thrift industry official who were gathered here for the annual convention of the mortgage bankers' group.
Currently, the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association cannot buy home loans larger than $191,250 in the continental United States. The limit has long been 50% higher in Alaska and Hawaii.
Angelo R. Mozilo, the new president of the trade group and chief executive of Countrywide Funding Corp., said the higher ceiling should be extended to New York, California, and other areas with high housing costs. The special ceilings for Alaska and Hawaii were established decades ago because of higher housing costs in those markets.
Mr. Mozilo said his plan as proconsumer, because loans purchased by the agencies typically carry lower interest rates.
"American families in New York and California should be entitled to the same benefits as those in Hawaii and Alaska," he said.
The plan clearly would result in more business for mortgage banking companies. These companies sell most of their loans to the agencies, so most are below the maximum size.
Benefits Seen for Well-Off
But Alfred A. Dellibovi, deputy secretary of the Department of Housing and Urban Development, said a rise in the limits would not serve the people who need assistance most.
The current ceiling is high enough, he said, noting that borrowers must have income of about $82,000 to qualify for loans of the current maximum size.
"We don't hear complaints from any source about a lack of mortgage availability for people earning over $82,000," he said. "The kind of complaints we hear are about lower-income people, moderate-income people and the kind of thing the HMDA data showed."
He was referring to data released for the first time earlier this week that suggest there is racial discrimination in mortgage lending. Publication of the data, which were compiled by the Federal Reserve Board, is required under the Home Mortgage Disclosure Act.
Kevin Chavers, staff counsel for the Senate Banking Committee, said senators are concerned that the agencies focus too heavily on homebuyers with median income or more.
"I don't think there's a lot of sympathy" in the Senate for raising the loan limits, he said.
The thrift industry is also likely to oppose a move that would help mortgage bankers increase their loan originations.
"Any idea to raise the loan limits anywhere doesn't make much sense to us," said Dennis Jacobe, director of research for the U.S. League of Savings Institutions.
By law, the limits are adjusted each year to reflect changes in a home-price index. Some industry insiders are betting that the limit for home loans in the continental U.S. will top $200,000 for the first time.