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More buyers would need jumbo loan under proposal


WASHINGTON – Dec. 18, 2013 –The Federal Housing Finance Agency (FHFA) that oversees Fannie Mae and Freddie Mac – government-owned enterprises that free money in the mortgage market by buying loans from banks – has floated a new proposal designed to lower Fannie and Freddie’s role, and fund more mortgages through the private sector: It wants to lower the maximum amount of a loan Fannie Mae and Freddie Mac can purchase from lenders.

FHFA is publishing the proposed rule in the Federal Register and taking consumer comments.

Under the proposal, the loan cap in most areas of the U.S. – generally outside high-cost housing areas – would drop to $400,000 from its current $417,000 for one-unit properties – about a 4 percent reduction. In higher-cost areas that currently have a higher loan limit, the loan cap would also go down by about 4 percent, taking a maximum loan in high-cost areas from $625,500 to $600,000.

According to FHFA, under its authority as conservator of Fannie Mae and Freddie Mac, the rule would modestly reduce Fannie Mae’s and Freddie Mac’s business at the high end of the market, invite private capital to re-enter the market, and limit taxpayer exposure to losses.

The move is not yet official, however. FHFA has invited public input on potential operational and technical issues associated with the planned decrease before it undertakes any modifications, including whether six months’ advance notice is adequate; whether FHFA should announce a multi-year schedule of decreases; and the timing of any future loan limit reductions.

FHFA says no final decision will be made until the comments are reviewed. If FHFA doesn’t make changes, the proposed limits go into effect on Oct. 1, 2014.

The deadline for public comments is March 20, 2014.

More information on the proposal can be found at the Federal Housing Finance Agency website. Comments can be mailed to:

Federal Housing Finance Agency
Office of Policy Analysis and Research
400 7th Street, SW, Ninth Floor
Washington, D.C. 20024

Comments can also be submitted via email to

© 2013 Florida Realtors®

Related Topics: Mortgages