Appropriations committees in the House and Senate are proposing to extend the temporary limits for conforming jumbo loans either insured by the Federal Housing Administration
(FHA) or purchased by the government-sponsored enterprises (GSE) Freddie Mac (FRE)
and Fannie Mae (FNM)
The proposed extension of the conforming minimum of $729,750 for mortgages in higher-priced markets would run through the end of 2010.
“While those loan limits aren’t scheduled to go down to $625,500 until January 1, if not maintained at the higher level now, the mortgage industry will begin to plan for loans at the lower amount,” according to a joint press release by the chairs of the appropriations committees in both houses of Congress, Sen. Daniel Inouye (D-HI) and Rep. David Obey (D-WI).
Inouye and Obey added: "This could result in major disruptions in the mortgage origination market for large loan sizes as early as November."
The proposal is included in a continuing resolution that will keep the federal government operating through Dec. 18, 2009. The resolution is attached to an appropriations bill to fund the federal government’s interior and environment initiatives.
The appropriations bill, including the resolution, still face votes in both the House and Senate. Currently, the temporarily extended conforming limits for loans Fannie and Freddie are allowed to purchase are set to expire at the end of the year. The extension would also apply to conforming loans and reverse mortgages -- or home equity conversion mortgages (HECM) -- insured by the FHA.
In anticipation of the expiration, HousingWire
sources have indicated that some lenders are setting deadlines as early as next week for rate locks on jumbo conforming loans.
Write to Austin Kilgore