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New Proposal To Lower Conforming Loan Limits For Fannie Mae & Freddie Mac.

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Acting Director of the Federal Housing Finance Agency (FHFA) Edward DeMarco is considering a New Proposal To Lower Conforming Loan Limits For Fannie Mae & Freddie Mac.  DeMarco's Proposal is meeting opposition from the Lending Industry and Congress. For once Congress is responding properly and in the best interest of Homeowners in my opinion by opposing this proposed action by the Acting Director of the FHFA.  Lowering the Conforming Loan Limits at this time is absolutely the wrong thing to do, and Congress needs to make sure it does not happen.

The Housing Market is still trying to recover from the mess of the last several years.  Lowering the Conforming Loan Limits would be a step backwards in achieving a recovery, and present a barrior for many families purchase homes in higher price markets.

The present Conforming Loan Limit is $417,000, and has been the Conforming Loan Limit for single family properties since 2006. Several attempts have been made in recent years to lower this limit, but none have succeeded, and the Conforming Loan Limit has remained the same.  The latest attempt by acting Director of the Federal Housing Finance Agency (FHFA) Edward DeMarco, would lower the Conforming Loan Limit to $400,000.  This may not seem like much, but in higher priced markets it could impact the purchase of a number of properties.

Even if proof can be shown that because of declining property values, the Conforming Loan Limit which was set at the height of the Housing Market is no longer needed, it would still be a bad idea to do so.  The hope is for the Housing Market to rebound nationwide as it already has started to do in many parts of the Country.  Lowering the limit would restrict the ability to obtain financing on higher price home which in turn would limit the sales of higher price homes.

Hopefully Congress will be successful in blocking DeMarco from following through on his New Proposal To Lower Conforming Loan Limits For Fannie Mae & Freddie Mac, especially since DeMarco does not really need their approval to lower the Conforming Loan Limit.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by

George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Fax (860) 760-6891

Email Me
About Me
My Blog

I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, and RI

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.

 

Comments(26)

Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Well for once let us see our Congress act cohesively to fight this and keep the housing market on its road to recovery, George!  Yeah, I'm waiting for you to visit a relative here and surprise me!!  lol

Oct 24, 2013 11:25 PM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Wow!

Reduce the limit $17,000!! That was the limit in 1985.

Any reduction is going to hurt some home owners. $17,000 is going to cause pain, but help nothing!

Raising conforming rates allowed home values to go up with no additional benefit or function, just like lowering interest rates.

$17,000 is a mere pittance why hurt people for nothing with no benefits?

$170,000 would hurt allot more, but there would be great long term benefits.

Bill

Oct 25, 2013 02:30 AM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

I wonder what DeMarco's reason is for lowering conforming loan limits? If it were to help the economy, in what way? Just wondering.

Oct 25, 2013 02:54 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

George: I read yesterday that Fannie and Fredddie have tabled that discussion for the next 6 months. Is that what you read?

Oct 25, 2013 03:58 AM
Pam Graham
All Real Estate Options - Jacksonville, FL
Jacksonville, Clay & St Johns Counties

I rarely seem to side with Congress, but on this subject, I am glad they are using their brains and voicing their concerns over this situation.

Oct 25, 2013 06:56 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Well, that's interesting.  Most markets are now, if they haven't already, seeing home prices go up.  I think they should keep it where it is for now.  There are bigger issues that can be addressed, and this is not one of them.

Oct 25, 2013 07:43 AM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

NAR is doing a major lobbying effort on this and they understand the ramifications. REALTORS® need to act on this regardless of waiting for a call to action. You need to write or email DC.

Oct 25, 2013 08:22 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

I think they are going in the wrong direction George. We ought to be raising the limits if the market is getting stronger.

Oct 25, 2013 11:28 AM
Jay & Michelle Lieberman
Keller Williams World Class - Agoura Hills, CA
Creating Calm in the Buying and Selling Chaos

Government is great about getting in the way of its American citizens.  Another hurdle put in front of us.

Oct 25, 2013 12:12 PM
Lana Robbins Realtor ® Licensed Real Estate Broker
Aloha Kai Real Estate - Clearwater, FL
Licensed in Florida, Washington, and Hawai'i

Hi George. This wil adversely affect everyone. I am not a fan of it....

Oct 25, 2013 12:52 PM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

George -  I find this post very informative.  Thanks for sharing your perspective.

Oct 25, 2013 01:05 PM
Janis Borgueta
Newburgh, NY
Retired RE Salesperson

You can be sure that the banks have a reason that they want this to happen. That plan is NOT being shared with the general public. Whatever their motive is, the end result is to benefit banks and not individual home owners

Oct 25, 2013 01:45 PM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

George, I remember some exceptions to this limit (25% more in some counties). Not sure if it is still there. And actually, they should go up on the limit - not down!

Oct 25, 2013 02:12 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, it would seem that Congress has to start listening to their constituents. They got an earful over this past budget and if they start to over act and not think they will see it come election time

Oct 25, 2013 09:41 PM
Aaron Hofmann
Atlanta Communities - Smyrna, GA
aka Mr. Smyrna Vinings

This is something that the average person would ignore feeling like it doesn't impact them since they already have a home or aren't planning to purchase right now. But when the time comes, they'll understand that higher down payments and higher rates on jumbo products mean more money out of their pocket and will wish they paid attention earlier.

Oct 25, 2013 10:43 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

George, this doesn't make any sense. What rationale is he using to lower the amount to $400,000?

Oct 25, 2013 11:10 PM
Rob Spinosa
US Bank - Larkspur, CA
Mortgage Loan Originator, Marin County

Is it just me or are there others out there who recognize that all of these changes (Dodd-Frank, etc.) are fixing a problem that, largely, no longer exists?

My average FICO is 763.  Nobody has originated a stated income loan in 6 years.  You have to source a borrower's down payment back to the Middle Ages.  What else do these guys want?  What witchhunt are they on?

It's easy to say, "oh, it's just from $417K to $400..."  But it's not happening in a vacuum.  When you add this to all of the other shackles we're now wearing, you're just pushing more of the best of the best out of the housing market.

Look, if we want a nation of renters, there is a better way to do it.  But death by 10,000 papercuts seems to be Washington's idea of a fitting demise for the housing economy.

 

Oct 26, 2013 12:40 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Hey George, Yes I hav e seen and heard a lot of chatter on this as well. I do not believe that this will be lowered and the arguement for falling prices isnt accurate, especially in the last 2yrs our country has rebounded and prices are rising. In addition this number was constantly being raised until 2006 and has been stagnant since so I dont see this happening... but then again I NEVER saw Obama getting relected (buying enough votes, for a second term)

Oct 26, 2013 02:16 AM
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

George: This sounds like a person who just came from obama care where he was fired. What could someone be thinking unless it is a government person looking to ruin our way of life. Preety stupid and very sad.

Oct 26, 2013 03:07 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

The market is back on the rebound.  Best to leave the loan limits alone and let the market recover.

Oct 26, 2013 06:40 AM