WASHINGTON, D.C. – Nov. 27, 2013 – The Federal Housing Finance Agency (FHFA) announced that the 2014 maximum conforming loan limit for mortgages acquired by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties in most areas of the country.
National Association of Realtors® (NAR) President Steve Brown issued a statement praising the move since FHFA earlier suggested that it might lower the loan limits.
“In September, when reports surfaced that FHFA Acting Director Edward DeMarco was considering using conservator authority to lower loan limits, NAR cautioned that such an experiment would jeopardize homeownership for many creditworthy buyers, especially first-time home buyers who are often less likely to meet the 20 percent minimum down payment requirement,” Brown said.
According to Brown, the mortgage market already faces a number of potential challenges, and a change to loan limits would have added one more element of risk.
“In January 2014, many changes stemming from the Dodd-Frank Act will go into effect, including the ability-to-repay requirement,” he said. “In addition, risk retention regulations remain in flux, including the definition of a Qualified Residential Mortgage (QRM). Lowering loan limits at this time would create even more confusion and uncertainty, and we would run the risk of reversing the progress that’s been made in the economic recovery.”
Conforming loan limits – the maximum amount of a loan before a buyer requires a jumbo mortgage – can change at the end of each year. The Housing and Economic Recovery Act of 2008 (HERA) establishes the maximum conforming loan limit that Fannie Mae and Freddie Mac may set for mortgage acquisitions and requires annual adjustments to reflect changes in the national average home price.
© 2013 Florida Realtors®