Industry News

Regulators set stage to cut conforming loan limit in 2009

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As lawmakers debate whether to increase the conforming loan limit to allow Fannie Mae and Freddie Mac to purchase more loans, regulators who oversee the government-sponsored entities are making plans to reduce the limit in 2009 in conjunction with falling housing prices. The Office of Federal Housing Enterprise Oversight today said its previous plan to leave the conforming loan limit unchanged at $417,000 in 2008 stands, regardless of how steeply home prices fall this year. But if cumulative home-price declines in 2006, 2007 and 2008 exceed 3 percent, the limit should be adjusted accordingly, OFHEO said. Previously, the regulator of Fannie and Freddie had proposed setting the threshold for a downward adjustment at a 1 percent price decline over three years. Industry groups representing lenders, home builders and Realtors objected to that plan, arguing that OFHEO lacks the legal authority to reduce the conforming loan limit. OFHEO will accept additional comment on the new proposal for ...