Banking Group Seeks Temporary $1 Million Loan Limit
June 3, 2009
The Consumer Mortgage Coalition is urging the government-sponsored enterprises' regulator to suspend the conforming loan limits and allow Fannie Mae and Freddie Mac to purchase single-family loans of up to $1 million. It is difficult and expensive to get jumbo loans and the current GSE loan limits that range from $417,000 to $729,750 are "causing market disruptions," the mortgage industry group says in a letter to the Federal Housing Finance Agency. "We recommend that the conforming loan limit be suspended for loans below $1 million while the FHFA serves as the GSE conservator so that the government-sponsored enterprises can add liquidity throughout the mortgage market and across the country," CMC says in a June 1 letter. Separately, the Mortgage Bankers Association is urging Congress to permanently raise the GSE conforming loan limit to $625,000 and retain the flexibility to provide financing of up to $729,750 in higher cost markets.
JMO: this would be a significant move! I believe that many homes prices have been "artificially" driven down to the conforming loan limit for that area. If we lifted the limit to $1,000,000 it would stimulate buying. The current spread between conforming loan rates and jumbo loan rates is so significant that it is a deterrent to all by the most determined jumbo loan applicants.
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