As part of the economic stimulus package, an increase in the conforming limit could now be a reality, at least for
a brief period. Congress and President Bush agreed, but have not voted yet, on a 1-yr increase in the
conforming loan limit to $730K. There is not a lot of detail yet (there is confusion as to whether the $730K, or
$725, is for high cost housing areas, or everywhere, and just what high cost areas are?). Just when mortgage
originators everywhere were breaking out the Cold Duck, OFHEO's director James Lockhart (Office of Federal
Housing Enterprise Oversight, who oversees FNMA & FHLMC) issued a statement saying "We are very
disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the
absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the
GSEs' regulator has all the necessary safety and soundness tools. Yesterday Chairman Dodd talked about
moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee.
We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit
moves through their rigorous new product approval process quickly and has appropriate risk management
policies and capital in place."