Tuesday, November 27, 2007
Fannie, Freddie loan limits kept at current level
by Neil Adler Contributor (Baltimore Business Journal)
The regulator for Fannie Mae and Freddie Mac said Tuesday that the maximum conforming loan limit in 2008 for single-family mortgages purchased by the two mortgage-finance companies will remain at this year's level of $417,000 for one-unit properties in most of the U.S.
Higher limits apply to Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as to properties with more than one unit.
The conforming loan limit determines the maximum size of a mortgage that Washington, D.C.-based Fannie Mae or McLean, Va.-based Freddie Mac may buy or guarantee. Both companies purchase residential mortgages and also package loans into mortgage-backed securities for sale to other investors.
By law the maximum conforming loan limit is based on the October-to-October change in the average house price in the Monthly Interest Rate Survey of the Federal Housing Finance Board. This board reported the decline in the average price was $10,685, or 3.49 percent, from $306,258 in October 2006 to $295,573 in October 2007. The combined two-year decline is now 3.65 percent.
"While the house price survey data used in determining the conforming loan limit show a decline over the past year, as previously announced and consistent with the proposed new conforming loan limit guidance, the level will remain at $417,000 for the third straight year," James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), said in a statement.
U.S. lawmakers have sought to increase the conforming loan limit for the two mortgage finance giants, with the hope that Fannie Mae and Freddie Mac could provide some liquidity to the mortgage market, which continues to struggle from the fallout in the subprime sector.