Government-backed mortgage caps to decline

TRD New York /
Jul.July 06, 2011 12:52 PM

The federal government is planning its first pullback from the mortgage market since the downturn, lowering the maximum loan amount that Fannie Mae, Freddie Mac and federal agencies can back from its elevated level of $729,750, according to the Wall Street Journal. That maximum was set by Congress three years ago in an attempt to ensure that borrowers could continue to obtain loans in particularly expensive housing markets during the credit crunch. In October, that amount is set to decline by varying amounts depending on the market; in prime real estate locations, like New York, Los Angeles and Washington, D.C., the limit will decline to $625,500. Some lenders will stop accepting mortgage applications beyond the newly-lowered caps prior to Oct. 1 to make sure all loans are processed by the deadline. Nationwide, 250 counties will be affected by the new Fannie and Freddie limits, while the Federal Housing Administration will lower its limits in roughly 600 counties. Data from the Federal Housing Finance Agency shows that had the new caps been in place last year, Fannie and Freddie would have guaranteed 50,000 fewer loans, the vast majority of which would have been in California, Massachusetts, New York and New Jersey. Several industry analysts have expressed concern that the government’s move will lead to a further slump in home prices in those areas. [WSJ]


Related Articles

arrow_forward_ios
The 30-year fixed-rate mortgage averaged 3.07 percent for the week ending July 2 (iStock)

Mortgage rates hit all-time low

Mortgage rates hit all-time low
Freddie Mac of Debby Jenkins (Freddit Mac, Getty)

Freddie Mac extends multifamily loan forbearance relief to landlords

Freddie Mac extends multifamily loan forbearance relief to landlords
Federal Housing Finance Agency Director Mark Calabria (Photo by JIM WATSON / AFP)

Fannie, Freddie will buy loans in forbearance — for a pricey fee

Fannie, Freddie will buy loans in forbearance — for a pricey fee
FHFA Director Mark Calabria (Photo by Zach Gibson/Getty Images)

Fannie, Freddie consider buying home loans in forbearance amid liquidity crunch

Fannie, Freddie consider buying home loans in forbearance amid liquidity crunch
Freddie Mac CEO David Brickman

Freddie Mac extends loan forbearance period on multifamily landlords

Freddie Mac extends loan forbearance period on multifamily landlords
FHFA Director Mark Calabria (Photo by Zach Gibson/Getty Images)

Fannie, Freddie offer multifamily landlords a break — strings attached

Fannie, Freddie offer multifamily landlords a break — strings attached
The 30-year fixed-rate average fell to 3.45 percent (Credit: iStock)

US mortgage rates hit 3-year low

US mortgage rates hit 3-year low
Ex-Fannie Mae employee in LA sentenced in bribery, kickback scheme

Ex-Fannie Mae employee in LA sentenced in bribery, kickback scheme

Ex-Fannie Mae employee in LA sentenced in bribery, kickback scheme
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...