Industry NewsMortgage

Lawmakers push for stronger Fannie, Freddie

Proposals would lift GSEs' caps, raise conforming loan limit

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Mortgage repurchasers Fannie Mae and Freddie Mac should be allowed to play a greater role in easing the mortgage lending credit crunch, say lawmakers who want to raise the conforming loan limit and lift caps on Fannie and Freddie's loan portfolios. Rep. Barney Frank, chairman of the House Financial Services Committee, said a bill passed by the House this spring overhauling oversight of the government-sponsored entities, or GSEs, should have gone farther in raising the conforming loan limit -- the maximum-size loan Fannie and Freddie normally purchase or guarantee. A bill the House sent to the Senate in May, HR 1427, would leave the conforming loan limit at $417,000, but allow Fannie and Freddie to securitize and sell loans up to 150 percent over the limit in areas where the median home price exceeds the limit. As envisioned by the House, Fannie and Freddie would be able to fund loans of up to $625,000 in the highest-cost areas -- meaning buyers could take advantage of the lower rates...