Despite a slight decline in housing prices, the regulatory office that oversees Fannie Mae and Freddie Mac’s financial health said today it will allow the conforming loan limit to remain at $417,000 in 2007.
Office of Federal Housing Oversight (OFHEO) director James Lockhart announced earlier this month that the office would defer any reduction in the conforming loan limit for one year to “ensure an orderly and transparent process for any downward adjustment.”
The conforming loan limit determines the maximum size of loans eligible for purchase by government sponsored mortgage repurchasers Fannie and Freddie. The limit is tied to the October-to-October change in average house price in the monthly interest-rate survey conduced by the Federal Housing Finance Board.
The FHFB reported a .16 percent decline in average house price to $306,258 in October 2006 — the first decline since 1992-93.
Lockhart said OFHEO is giving plenty of advance notice of its intentions regarding the conforming loan limit in order to avoid disrupting the end-of-the-year pipeline of mortgages or the market for mortgage-backed securities.
In keeping with that intent, OFHEO says it will issue additional guidance for the 2008 limits early next year.