Raising the roof on conforming real estate loans

A plan to jumpstart homebuying

Editor’s note: This column has been updated to provide more background on how the conforming loan limit is determined, and to correct factual errors.

In the world of financial services sometimes the easiest solutions are the hardest to implement. For some of us observing the crosscurrents in the real estate market, that certainly seems to be the case with mortgages.

President Obama and probably even the Tea Party Republicans would like to see more people buying homes today, yet we continually create impediments to that. One of those roadblocks is what is known as the conforming loan limit, which sets the highest value of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee.

The conforming loan limit has traditionally been tied to the average house price in the Monthly Interest Rate Survey (MIRS) of the Federal Housing Finance Board (FHFB).