High-cost housing markets would be hurt by lower loan limits proposed in a Senate bill that would replace mortgage giants Fannie Mae and Freddie Mac with a federal mortgage insurer, the California Association of Realtors says.
"While the bill is a starting point, any final legislation must not hinder liquidity for qualified homebuyers, especially in a down market," said CAR President Don Faught in a statement.
S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013, would set the conforming loan limit for single-family homes at $417,000, to be adjusted each year to reflect changes in home prices. Limits in Alaska, Hawaii, Guam and the U.S. Virgin Islands could be set as high as 150 percent of the conforming loan limit ($625,500).
In high-cost areas where the median house price exceeded $362,600, the conforming loan limit could also be increased to as much as 150 percent of the conforming loan limit ($625,500) during the first year after the bill became law. Limits in high-cost areas outside of Alaska, Hawaii, Guam and the U.S. Virgin Islands would be stepped down over five years, and then be capped at 125 percent of the conforming limit ($521,250).