WASHINGTON (12/17/13)--The Federal Housing Finance Agency is seeking public comment on a plan that could gradually reduce maximum loan limits by over 4% for loans eligible to be purchased by Fannie Mae or Freddie Mac, the agency said yesterday.
Under the plan, the current statutory maximum loan limit for one-unit properties would decline from $417,000 to $400,000. The FHFA said the loan purchase limit would be reduced by the same percentage in other parts of the country, including high cost areas in the contiguous states where current limits are set at $625,500. Those loan purchase limits would be set at $600,000, according to the FHFA.
The Credit Union National Association is studying the proposal carefully and the agency has said that the proposed plan does not represent final action. However, CUNA is concerned about the potential reduction in the loan amount, particularly for high-cost areas. CUNA is also concerned that this proposal is moving forward before the new FHFA director, Mel Watt, has been sworn in.
CUNA will be reviewing the proposal with its Housing Finance Reform Task Force and CUNA Lending Council among other groups and will issue a CUNA Comment Call to summarize the proposal and encourage credit union mortgage lenders to comment shortly.
The proposal has not been published in the Federal Register
yet; the agency is seeking comments through March 20.
Credit unions can comment on those issues and others such as:
Whether six months' advance notice is adequate for any changes that are made;
Whether it is preferable for FHFA to announce a multi-year schedule of decreases; and
To what date any future loan purchase limit reductions should be tied.
The FHFA said any changes will not apply to loans originated before Oct. 1, 2014.
In a comment letter filed with the agency in October, CUNA and a coalition of financial services and housing market representatives said reducing the size of mortgages that Fannie Mae and Freddie Mac can purchase "would have a very disruptive impact on the availability of affordable housing credit." See Oct. 10 News Now
item: CUNA: Reducing Mortgage Limits Would Disrupt Housing Recovery.)