The maximum value of a single-family mortgage eligible to be purchased by Fannie Mae or Freddie Mac will remain at $417,000 for the third straight year, according to the Office of Federal Housing Enterprise Oversight, known as OFHEO.
“While the house price survey data used in determining the conforming loan limit show a decline over the past year, as previously announced and consistent with the proposed new conforming loan-limit guidance, the level will remain at $ 417,000 for the third straight year,” said James Lockhart, OFHEO’s director, in a statement.
The conforming loan limit is based on the average October-to-October change in home prices, which fell $10,685, or 3.49% to $295,573 in the latest Federal Housing Finance Board survey.
The news isn’t too surprising, as last month the OFHEO said under no circumstance would the conforming limit drop, and since home prices were sliding, many expected no increase.
The California Association of Mortgage Brokers has been lobbying to raise the conforming loan limit from $417,000 to $625,000, which they estimate will allow tens of thousands of homeowners to obtain more favorable financing.
Currently, the median home price in California is roughly $588,970, making it difficult for many potential homeowners to get a mortgage without putting a sizable sum of money down at closing or going with a jumbo mortgage.
Fannie Mae and Freddie Mac, as well as certain Senators have also been pushing for a temporary lift of the conforming limit to ease the burden of the mortgage crisis, though the Bush Administration and Fed Chief Bernanke have been strongly opposed.
Shares of both government-sponsored entities, who buy many of the loans mortgage lenders originate and then repackage them as securities, rose slightly after being battered Monday following a downgrade.