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Loan limit language tied to Senate spending bill

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WASHINGTON (10/24/11)--Legislation that would return the Federal Housing Administration's (FHA) insurance limit for single-family home loans to $729,750 was approved by the Senate in a 60-38 vote, and attached to a minibus spending bill, late last week.

The minibus spending bill was passed by the House earlier this year. A Senate vote on the spending bill is expected in the coming weeks.

The mortgage-related legislation, known as the Homeownership Affordability Act of 2011, was introduced earlier this year by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.), and co-sponsored by Sen. Dianne Feinstein (D-Calif.). The legislation would allow the FHA, Fannie Mae, Freddie Mac, and the Veterans Administration (VA) to guarantee mortgages up to $729,750, or 125% of local median prices for single family homes, through Dec. 31, 2013.

The maximum conforming loan limit was previously set at $729,750, but fell to $625,500 on Oct. 1 when a loan limit extension could not be agreed to by Congress. The Housing and Economic Recovery Act (HERA) of 2008 requires that Congress set maximum conforming loan limits each year.

Menendez earlier this year said that allowing the loan limits to expire "would be bad medicine for our economy at a time when we need a booster shot," and Isakson added that he is "concerned that failing to extend these limits would make it even more difficult for the average homebuyer get a mortgage and buy a home when credit is already tight."

Inside Washington (10/21/2011)

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  • WASHINGTON (10/24/11)--Lawmakers on Thursday raised concerns about whether U.S. regulators possess the insight to predict the impact a financial crisis in Europe would have on the U.S. financial system. During a Senate Banking Committee's security and international trade and finance subcommittee hearing, Sen. Mark Warner (D-Va.) asked Lael Brainard, undersecretary for international affairs for the Treasury Department, whether his agency had the "real-time knowledge" to monitor depository exposure in Europe (American Banker Oct. 21). Direct exposure is relatively modest, and the most detailed information available is on money market funds, Brainard said. But even with moderate direct exposure to depository institutions, the financial crisis in Europe is a grave threat to the global financial recovery, and the fragile U.S. economy is vulnerable to offshore disruption, he added …
  • WASHINGTON (10/24/11)--Republicans--many of whom favor a more limited government role in the housing market--may be abandoning support for subsidizing the benchmark 30-year fixed-rate mortgage. Sen. Richard Shelby (R-Ala.) questioned the unintended consequences of subsidizing the 30-year fixed-rate mortgage during a Senate Banking Committee hearing Thursday (American Banker Oct. 21). Lawmakers need to reconsider if the preferential pricing of the 30-year fixed mortgage is in the public's best interest, Shelby said. But not all Republicans agree. Rep. John Campbell (R-Calif.) is among the co-sponsors of a bipartisan bill that would preserve the 30-year fixed-rate loan …
  • WASHINGTON (10/24/11)--Thomas Hoenig, who recently retired as head of the Federal Reserve Bank of Kansas City, has been nominated as vice chairman of the Federal Deposit Insurance Corp., the White House said Thursday night (American Banker Oct. 21). Hoenig has criticized "too big to fail" financial firms, and in interviews stated that the Dodd-Frank Act may intensify rather than minimize the impact of large financial institutions. The FDIC is currently implementing a new resolution system for winding down large firms in danger of failing--a key component of Dodd-Frank. Hoenig was the president/CEO of the Federal Reserve Bank of Kansas City from 1991 to 2011 …

NEW D.C. FCU PresidentCEO nominated to NCUA board

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WASHINGTON (UPDATED: 10:15 A.M. ET)--President Barack Obama has announced his intent to nominate D.C. Federal Credit Union President/CEO Carla León-Decker to become a member of the National Credit Union Administration (NCUA) board. Gigi Hyland, whose six-year term on the NCUA board technically ended in August, congratulated León-Decker, saying the credit union executive “has extensive knowledge of the credit union system” and will “bring her acumen to the regulatory realm.” NCUA Chairman Debbie Matz said León-Decker “will bring valuable perspectives to the NCUA Board—particularly her inspiring commitment to providing affordable financial services for recent immigrants, low-income families, and many people of modest means.” León-Decker served as Operations Manager and, later, as president/CEO PAHO/WHO FCU between 1994 to 2000, and also served as branch manager of Transportation FCU between 1988 and 1994. She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals. Her nomination is subject to congressional approval.