The Office of Federal Housing Enterprise Oversight issued final guidance on conforming loan limits Wednesday, and said it won’t lower traditional conforming limits as housing prices decline — a change in policy from earlier proposals that would have seen the GSE lending limit drop under certain conditions, as housing prices continue to fall.

Based on comments received in two public comment periods, OFHEO said its final guidance included provisions that keep the traditional conforming loan limit at $417,000 during 2009 and subsequent years. However, the traditional conforming loan limit will not increase, OFHEO said, until cumulative increases in house prices have exceeded cumulative decreases since the $417,000 limit was first established. The guidance only applies to traditionally conforming loans, and does not affect the recently instituted “jumbo conforming” loan program enacted by Congress earlier this year through the end of 2008. “This revised guidance responds to the comments that we received and OFHEO’s belief that stability in the mortgage market is very important,” said OFHEO director James B. Lockhart. “Not decreasing the limit will eliminate potential operational and implementation issues.” The conforming loan limit is adjusted annually through a calculation of year-over-year October changes to the level of home prices based on data from the Federal Housing Finance Board’s Monthly Interest Rate Survey (MIRS). Industry participants had argued that the MIRS price survey is too volatile, which was part of the reason OFHEO agreed to stabilize conforming loan limits during the housing downturn. Lockhart suggested that pending GSE reform legislation would allow the selection of a broader and more comprehensive price index. For more information, visit

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