Industry News, Mortgage, Story

Bill would extend higher loan limits

Committee OKs $729,750 GSE limit through fall 2010

A spending bill approved by the House Appropriations Committee would extend the temporary $729,750 loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration in high-cost housing markets through September 2010.

Congress first raised the limits last year after the secondary market for mortgages collapsed in the late summer of 2007, allowing Fannie, Freddie and FHA to to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.

Although banks and credit unions continue to make larger "jumbo loans," they must hold them on their books, making them more expensive and harder to obtain than loans eligible for purchase or guarantee by Fannie, Freddie and FHA (see story).

The spending bill approved by the Appropriations Committee to fund transportation, housing and urban development programs would also continue the FHA’s Home Equity Conversion Mortgage (HECM) reverse mortgage program for seniors, according to a summary posted by the committee.

Other provisions of the bill include $196.8 million for counseling families in danger of losing their homes to foreclosure, and $70 million to continue pre-purchase counseling for prospective homebuyers.

The bill would provide $4.6 billion to fund community and economic development projects in 1,180 localities, a $725 million increase from 2009, and $250 million to "transform neighborhoods of extreme poverty into sustainable mixed-income neighborhoods" by demolishing "severely distressed" public housing.

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