Countrywide CEO Angelo Mozilo wrote an opinion piece in the Wall Street Journal today, calling on Congress to raise the conforming loan limit to $625,000 for one year.
“Here is the problem: The federal government now imposes a cap on the size of mortgages that government-sponsored enterprises (GSEs) and the Federal Housing Administration (FHA) can hold or insure,” Mozilo wrote.
“This cap is simply too low to meet the needs of buyers in many communities across the country.”
Currently, the median home price in California is roughly $588,970, making it extremely difficult for many potential homeowners to get a mortgage without putting a sizable sum of money down at closing or taking out a jumbo mortgage.
“To mitigate this problem, Congress needs to temporarily raise the limits it now imposes on Fannie Mae, Freddie Mac and FHA mortgages by 50%, to $625,000,” he added.
Previously, Mozilo had called for a conforming loan limit increase as high as $850,000.
“This reform should be temporary — 12 months ought to be long enough. It should be done nationwide — homeowners across the country need to be able to take advantage of it,” he said.
Any move to raise the conforming loan limit will be a clear benefit to Countrywide, the top U.S. mortgage lender, who recently shifted its focus to government-backed lending.
“We urge policy makers to act now on pending legislation to help the housing GSEs and the FHA increase liquidity in the market and preserve homeownership for struggling borrowers.”
“By taking aggressive action to increase liquidity in the short term, and by establishing clear and objective rules to govern the industry over the long term, we are confident that homeownership — and the economy — will rebound stronger than ever,” he concluded.
A week ago, the Office of Housing and Enterprise Oversight kept the 2008 conforming loan limit unchanged at $417,000 for the third straight year.
In related news, Fannie Mae reported a drop in its mortgage holdings, seeing its portfolio decline to $723 billion in November from $732 billion a month earlier.
Shares of Countrywide were up 60 cents, or 6%, to $10.60 in midday trading on Wall Street.