Industry News

OFHEO: Conforming loan limit likely to remain at $417,000

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The conforming loan limit -- the maximum-sized loan backed by government-sponsored mortgage repurchasers Fannie Mae and Freddie Mac -- won't be reduced to reflect a decline in home prices, but is likely to stay at $417,000 in 2007. That's according to James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored entity's financial soundness. OFHEO uses a survey conducted by the Federal Housing Finance Board (FHFB) to set the conforming loan limit, comparing the average home price in October to the previous year. If the October 2006 average home price is less than that of October 2005, the current conforming loan limit -- $417,000 in most parts of the country -- will be left in place, Lockhart said. Lockhart said a decline in the average home price is likely in October, because FHFB's survey showed a 3.1 percent decrease in September. But OFHEO will postpone any corresponding decreases in the conforming loan limit to 2008, he sa...