It’ll be a new game for mortgages beginning January 2014. The new Dodd Frank regulations will kick in January 10, 2014 tightening the underwriting guidelines for mortgages, and it appears the Federal Housing Finance Agency is considering a reduction in Fannie Mae and Freddie Mac’s loan limits that is slated to kick in the first day of January.
“FHFA has been analyzing approaches for reducing Fannie Mae and Freddie Mac loan limits across the country, and any such change would be announced with adequate advance notice for implementation on Jan. 1, 2014,” a FHFA spokesman said.
The maximum loan limit on Fannie and Freddie single-family loans is presently $625,500. The standard loan amount is $417,000.
In pursuing this loan limit reduction, the GSE regulator is following its own agenda of trying to entice private capital into the mortgage market. But FHFA acting director Edward DeMarco is also adhering to the new GSE policy that President Obama outlined in his Aug. 5 speech in Phoenix.
A White House fact sheet issued in connection with the Phoenix speech calls for the loan limits on FHA insured loans to fall at the end of 2013 as scheduled.
“Beyond that, HUD and FHFA should closely examine using their existing authorities to reduce loan limits further consistent with the pace of the recovery, market developments, and the Administration’s principles and transition plan for housing finance reform. Any changes should take into account regional differences in housing prices, and also regional variation in the pace of the housing recovery,” the fact sheet says.
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