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Schwarzenegger joins push to raise conforming loan limit

Governor: Half of Californians can't get GSE-backed loans

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Breaking with the Bush administration's position, California Gov. Arnold Schwarzenegger has added his voice to the chorus clamoring for an increase in the $417,000 conforming loan limit, the ceiling for mortgages eligible for purchase or guarantee by Fannie Mae and Freddie Mac. In a letter to congressional leaders, Schwarzenegger urged the passage of legislation raising the conforming loan limit to $625,000 in high-cost housing markets, allowing the government-chartered mortgage finance companies to play a greater role in California by expanding into what's now considered the jumbo loan market. The secondary market for so-called jumbo loans that exceed the conforming loan limit was disrupted last August, by fears of rising mortgage defaults and falling home prices. Those fears -- which began with rising defaults on subprime loans made to borrowers with blemished credit but spread to alt-A and even some prime loans -- have made jumbo loans harder to obtain since last summer...