FYI: House Fails to Vote on Extending Loan Limits
This is a re-post from REALTOR MAG that I thought I'd pass along.
Conforming loan limits on government-backed mortgages at Fannie Mae and Freddie Mac are set to expire on Oct. 1, because attempts to extend them haven't gain traction in Congress.
In 2008, Congress raised the limits up to $729,750 in some areas to make larger mortgages available in high-priced housing markets. The limits will drop to $625,500 on Oct. 1 in the many areas of the country, mostly affecting housing markets on West and East Coasts.
The Conforming Loan Limits Extension Act introduced in July by Reps. John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.) would allow GSEs and the Federal Housing Administration to purchase or guarantee mortgages worth as much as $729,750 in most areas. (Additionally, Reps. Brad Sherman (D-Calif.) and Gary Miller (R-Calif.) introduced a bill in May to make the loan limits permanent.)
Another bill, the Homeownership Affordability Act of 2011, introduced in August by Senators Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.) would keep the higher limits in place by increasing the guarantee fees charged on loans between $625,500 and $729,500. (Guarantee fees are charged by loan guarantors prior to bundling mortgages into securities.)
None of the bills in the House and Senate to extend the loan limits have been voted upon. The Conforming Loan Limits Extension Act, one of the House’s plans to extend the limits, failed to make it into a short-term spending bill, which will be voted on soon.
"We are focusing all of our effort and attention on making sure that a temporary extension of the current conforming loan limits is included in an omnibus spending bill that it appears the House and Senate will consider late this year," said a spokesman for Rep. John Campbell, R-Calif., who introduced the bill in the House.
The National Association of Home Builders has said it fears more than 17 million homes nationwide will become ineligible for more affordable federal funding if the loan limit expires. Federal Reserve Chairman Ben Bernanke has said he’s confident that the private market, including investors and insurers, would step up to fill the void when the conforming loan limits expired — although likely at a higher cost to borrowers.
"We expect to see significant negative consequences for the struggling housing market as a result of the limit drop after Oct. 1," Campbell's office said. "Therefore, it will be even more pressing and pertinent that Congress acts quickly to reverse the limit reduction at the next opportunity."
Source: “Extension of Conforming Loan Limits Fail in House,” HousingWire (Sept. 16, 2011) and “Senators Menendez and Isakson Call for Extending Higher Home Loan Limits to Boost Weak Housing Market,” Office of Sen. Johnny Isakson, R-Ga. (Sept. 16, 2011)