Three major trade groups urged Congress to enact legislation sooner rather than later to extend the high loan limits currently in place at Fannie Mae, Freddie Mac, and the FHA.
The groups, which include the MBA, NAR, and NAHB, argued that the enhanced loan limits were integral to an economic recovery because they make loans affordable for a wider array of homeowners, especially those in more expensive, hard-hit states.
They noted that though the temporary loan limits don’t expire until year-end, financing is already being hindered because mortgage lenders are concerned they won’t be able to sell the loans, and are unwilling/unable to retain them in their portfolios.
“Consumers cannot lock in current interest rates beyond 60 days for loans over $625,500,” the letter said. “As a result, loans that do not close before year-end will need to be re-underwritten and possibly then declined because of the higher interest rate and resulting mortgage payment.”
They also recommended that the loan limits be extended immediately so the FHA, FHFA, and GSEs have sufficient time to conduct market assessments and provide guidance.
“For example, the current loan limits, set by the American Recovery and Reinvestment Act of 2009 (ARRA), did not become fully operational until four months after the law was enacted.”
“We believe these temporary limits have benefited the mortgage industry and consumers during what has been a turbulent period for our nation’s economy.”
Earlier this year, James Heist, assistant inspector general for audit with HUD, cautioned that reform was necessary because higher loan limits exposed the agency to new areas of uncertainty.