Orlando Mortgage Blog

FHFA fathers know best on reducing your loan limits

October 28th, 2013 4:56 PM by BILL WILBANKS

The acting head of the Federal Housing Finance Agency while speaking at  the Mortgage Bankers Association's annual conference in Washington, D.C. today said though the agency would probably announce loan limit reductions on Fannie and Freddie Mac loans next month in November, he felt like with all the other changes facing the agency in January 2014 they would probably give a 6 month notice of the reductions to allow a less disruptive impact on the affordability of housing credit. Currently the standard conforming loan limit has sat at $417,000 for a number of years. More expensive or "High Priced" markets have already been reduced to $625,000.

He has received massive industry feedback against such a decision from major players such as the National Association of Realtors® (NAR), the Mortgage Bankers Association (MBA) and many others in the industry as well as many house members who have taken a negative stance against it.

He maintains the FHFA has the legal authority to reduce loan limits without congressional approval. Several members of the house disagreed, such as Rep. Gary G. Miller (R-Calif) stated "Congress did not give FHFA the authority to reduce the loan limits. In fact, we included language in the statute explicitly stating that the loan limits could not be reduced," he said Oct. 10. He was one of 66 House members from both parties who signed a letter to DeMarco warning him to leave the limits alone. Remember that this was the same man that the President used his special powers to appoint over objects of congress while they were on break.  

So here we go again. This bull nosed, my way or the highway or we'll just ignore you administration's policy in so many areas continues to rear it's ugly head yet again. Their rationale is that the market needs to entice more private money and less government exposure to this mortgage debt even though both Fannie and Freddie have been doing exceptionally well on the profit side and had been very successful for over 40 years until it hit the fan 5 years ago. It's too bad there hasn't been any "private money" to speak of show up to take it's place yet. Just more self-inflicted pain thanks to D.C. policy in a very fragile market.

So if in the meantime you are considering a home purchase that places you in the market for anything near that current $417,000 mortgage range. . . don't wait too long or it could be too late to get yourself a conforming interest rate to go with it and underwriting guidelines that are historically easier than what would be considered as a nonconforming or Jumbo loan.

Bill Wilbanks


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Posted by BILL WILBANKS on October 28th, 2013 4:56 PM


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