OFHEO establishes loan-limit guidelines

Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, has issued a Supervisory Guidance establishing a regulatory process for annual adjustments to the enterprises' conforming loan limit. The guidance, which lays out procedures to be applied to computations of future conforming loan limits, follows a review of concerns raised by the 2004 loan limit calculation. In that review, OFHEO determined that the 2004 limit adopted by Fannie Mae and Freddie Mac failed to incorporate a necessary adjustment factor brought on by methodological changes in the Federal Housing Finance Board's Monthly Interest Rate Survey (MIRS). The improper calculation resulted in a conforming loan limit of $333,700 dollars, which is $2,300 higher than it would have been if this adjustment had been made. In a letter and the guidance to the enterprises, Falcon said the adjustment that should have been made in 2004 will be incorporated into the 2005 calculation. From now on, OFHEO wi...