U.S. Senate votes to reinstate federal loan limits

The U.S. Senate voted this week to reinstated the Federal loan limits for mortgage loans guaranteed by Fannie Mae, Freddie Mac, and the Federal Housing Administration.  The higher loan limits expired September 30 and the new limits are an average of about 10 percent lower.

From South Carolina, Senator Lindsay Graham voted in favor of restoring the loan limits.  Senator Jim DeMint voted against restoring the loan limits.  The proposal now heads to the U.S. House for its consideration.

Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev., issued the following statement regarding the Senate action to reinstate higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30:

“The National Association of Home Builders commends the Senate for approving an amendment offered by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.) that is essential to help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers and move the economy forward. The 60-to-38 vote demonstrates bipartisan support for pro-housing policies that will help our industry to create jobs and spur economic growth.

“Restoring the higher loan limits for the housing government sponsored enterprise and the FHA will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.

“Congress must act soon to ensure that this measure is enacted into law. Otherwise, the current drop in mortgage loan limits will reduce housing demand, and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery.”

NAHB Call to Action: Congress Must Extend Conforming Loan Limits Now

NAHB issued the following Call to Action. Consider writing your member of Congress and ask him or her to support extending the conforming loan limits on mortgages.

Call Your Members of Congress at (866) 924-NAHB (6242)
Write Your Members of Congress at www.capitolconnect.com/builderlink

In two short weeks, on October 1, 2011, the conforming loan limits for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) will be lowered. The disruption that would occur with the lowering of the current loan limits would further damage the already fragile housing market and impede the economic recovery of our nation.

The housing finance system is under a cloud of uncertainty. The federal government, through the GSEs and the FHA, is currently accounting for nearly all mortgage credit flowing to home buyers and rental properties. Lowering the loan limits will only further restrict overall mortgage liquidity in the marketplace and place further downward pressure on home prices.

Talking Points:

  • Urge your members of Congress to support immediate efforts to extend the current loan limits for Fannie Mae, Freddie Mac and the FHA;
  • A drop in these mortgage loan limits would reduce home prices in major markets all across the country;
  • This is not the time to reduce housing demand and exacerbate the current housing downturn.

Two Ways to Act:

If you have any questions or feedback on this issue, please email BuilderLink@nahb.org.