FHFA Turns to Public for Advice on Loan Limits
December 17, 2013
The Federal Housing Finance Agency is inviting the public to comment on a new proposal to gradually reduce loan limits on the maximum size of loans purchased by Freddie Mac and Fannie Mae.
The FHFA proposal is aimed at shrinking the mortgage giants’ market presence in the high-end market and encourage more private capital into the mortgage markets.
The FHFA proposal would reduce the maximum loan for a single-family mortgage in most areas of the country from $417,000 to $400,000. FHFA specifies that the reduction would apply to loans eligible for purchase by the GSEs, and this would not apply to loans that the GSEs guarantee, the Mortgage News Daily reports.
FHFA’s plan proposes reducing current limits in “high-cost” areas, such as Washington, D.C., and the New York/New Jersey area, by 4 percent. Limits in high-cost areas currently go up to $625,000. Under the proposal, that would be reduced to $600,000.
The proposal, if approved, would not affect any loans originated before Oct. 1, 2014.
But FHFA says the proposal is not a final decision. The agency is seeking comments from the public on whether a six months' advance notice is adequate time for the proposed limits or whether it's preferable that it announce a multi-year schedule of decreases.
The deadline for public comments is March 20, 2014.
More information on the proposal can be found at the Federal Housing Finance Agency website. Comments can be mailed to:
Federal Housing Finance Agency
Office of Policy Analysis and Research
400 7th Street, SW, Ninth Floor
Washington, D.C. 20024
Comments can also be submitted via email to loanlimitinput@FHFA.gov.
Last week, the Federal Housing Administration announced that on Jan. 1, it would be reducing loan limits in 650 high-cost areas from $729,750 to $625,500.
Source: The Federal Housing Finance Agency and “FHFA Invites Comments on Maximum GSE Purchase Limits,” Mortgage News Daily (Dec. 16, 2013)
Updated: June 20, 2018