Regulator floats lower loan limits for Fannie, Freddie in October 2014 by Elaine360

Elaine Golden Gealer, Brentwood condos, Brentwood townhomes, Brentwood real estate, Brentwood new construction, Brentwood condominiums, Westwood condos, Westwood townhomes, Westwood real estate, Westwood new construction, Westwood condominiums, Westchester condos, Westchester townhomes, Westchester real estate, Westchester construction, Westchester condominiums, Toluca Lake condos, Toluca Lake townhomes, Toluca Lake real estate, Toluca Lake construction, Toluca Lake condominiums, North Hollywood condos, North Hollywood townhomes, North Hollywood real estate, North Hollywood new construction, North Hollywood condominiums, Sherman Oaks condos, Sherman Oaks townhomes, Sherman Oaks real estate, Sherman Oaks new construction, Sherman Oaks condominiums, Encino condos, Encino townhomes, Encino real estate, Encino new construction, Encino condominiums, Beverly Hills condos, Beverly Hills townhomes, Beverly Hills real estate, Beverly Hills new construction, Beverly Hills condominiums, West Los Angeles condos, West Los Angeles townhomes, West Los Angeles real estate, West Los Angeles new construction, West Los Angeles condominiums, West Hollywood condos, West Hollywood townhomes, West Hollywood real estate, West Hollywood new construction, West Hollywood condominiums, Santa Monica condos, Santa Monica townhomes, Santa Monica, real estate, Santa Monica new construction, Santa Monica condominiums, San Fernando Valley condos, San Fernando Valley townhomes, San Fernando Valley real estate, San Fernando Valley new construction, San Fernando Valley condominiums.The federal regulator of Fannie Mae and Freddie Mac is requesting public input on a proposed 4 percent reduction in the conforming loan limit, which has stood at $417,000 since before the housing bust despite falling home prices.

The Federal Housing Finance Agency is proposing to reduce the conforming loan limit to $400,000 as soon as next October. The loan ceiling for Fannie and Freddie in the priciest markets would be cut from $625,500 to $600,000.

FHFA characterized the proposal as part of a broader, gradual decrease in loan limits, to further a goal of shrinking Fannie and Freddie’s market share by reducing their role at the high end of the market.

The conforming loan limit is adjusted upward when prices rise, but hasn’t been adjusted downward. Bill McBride, author of the blog Calculated Risk, has estimated that the conforming loan limit would be around $360,000 if it had been allowed to fall with home prices during the downturn.

Real estate industry groups have objected to any reduction in the conforming loan limit, and questioned FHFA’s legal authority to impose reductions without direction from lawmakers.

The agency today published an impact analysis of the planned reductions, and outline its position that it has the legal authority to make them.

Had the proposed limits been in force last year, Fannie and Freddie would have been barred from purchasing about 170,000 of the mortgages they acquired in 2012, or 2.9 percent of total acquisitions. About 50,000 purchase mortgages would have exceeded the lower limits proposed today.

But because many homebuyers would be able to make larger down payments in order to qualify for a conforming loan — or obtain a “jumbo” loan not backed by Fannie and Freddie — higher loan limits might derail only 13,000 purchase loans, the FHFA analysis concluded.

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