The acting director of the Federal Housing Finance Agency has responded to President Obama’s call for lower limits on the size of loans originated for Fannie Mae and Freddie Mac.
Obama endorsed this past summer a gradual reduction in the conforming limit — a move that would directly increase private sector participation in the mortgage market and reduce taxpayers’ exposure.
Last month, FHFA Acting Director Edward J. DeMarco said that he wouldn’t rush a decision and would follow normal procedures and wait until this month to announce any changes to the conforming limit.
DeMarco also acknowledged the potential burden that would be placed on lenders in dealing with lower limits given the implementation of several new mortgage rules in January.
The conforming limit, which is established each year according to the Housing and Economic Recovery Act of 2008, currently stands at $417,000 for one-unit residential properties.
On Tuesday, FHFA announced that the conforming limit will stay the same in 2014.
“The baseline limit, $417,000 for one-unit properties in the contiguous U.S., was left unchanged based on historical index values for FHFA’s monthly and quarterly House Price Index,” the announcement stated.
However, conforming limits in several U.S. counties will move up from this year’s limits as a result of “strong home price gains.”
The limit on two-unit properties is $533,850, while the three-unit limit is $645,300, and the four-unit limit is $801,950.
Conforming limits in high-cost areas were maintained.
In Alaska, Hawaii, Guam and the U.S. Virgin Islands, the limit is 50 percent higher — or $625,500 for a single-family loan.
Some loans originated between July 1, 2007, and Sept. 30, 2011, will have limits as high as $729,750, according to the American Recovery and Reinvestment Act of 2009.
