Lawmakers push for extension of higher conforming loan limits
A New York congressman and 36 other lawmakers sent a letter to members of the House appropriations committee urging members to extend higher conforming loan limits for mortgages past the Oct. 1 expiration. The conforming loan limit allows homeowners with mortgages as high as $729,750 to obtain financing guaranteed by Fannie Mae, Freddie Mac and the Federal Housing Administration. The temporary ceiling expires in about three weeks, putting the limit back to $625,500. Congress raised the limit in 2008 when liquidity in the mortgage markets froze. Both the Obama administration and Republicans in Congress want private capital to return and believe the first step is allowing the conforming loan limit to drop. Much of the industry, however, want an extension. Robert Toll, executive chairman of luxury homebuilder Toll Brothers (TOL) recently said "my sources in D.C. say you shouldn't be surprised to see an extension to the conforming loan limits." Rep. Gary Ackerman (D-N.Y.) and a coalition of bipartisan lawmakers sent a letter to the appropriations committee this week urging them to include a conforming loan-limit extension in another resolution tied to government funding. Ackerman said not having the higher limit will disrupt an already volatile housing market, especially in New York and other high-cost areas. "Without the current limits, fewer mortgages would be eligible for the guarantees provided by Fannie Mae, Freddie Mac and the Federal Housing Administration," Ackerman wrote. "Private mortgage-lenders would have to assume the risk for mortgage loans above the lowered limits, something they have been unwilling to do in a weak housing market without passing the additional risk onto homebuyers in the form of higher interest rates and larger down payments, both of which would depress the housing market further," he said. Write to: Kerri Panchuk.