Despite prodding from President Obama, the regulator and conservator of Fannie Mae and Freddie Mac is holding off on any immediate decision to lower the limit on conforming mortgages.
This past summer, the president specifically endorsed a gradual reduction in the maximum size of loans originated for Fannie and Freddie.
Such a move is one of the most direct ways to increase private sector participation in the mortgage market and reduce taxpayers’ exposure.
But in a speech Thursday at the event, Zillow and the Bipartisan Policy Center:: Getting Our House In Order, FHFA Director Edward J. DeMarco said that he would follow normal procedures and wait until late November to announce any changes to the conforming limit, according to a transcript of his prepared remarks.
In addition, agency seller-servicers are expected to be given at last six months notice of any change to the limit.
DeMarco acknowledged that lenders will already have their hands full implementing new rules from the Consumer Financial Protection Bureau in January.
“I understand the potential timing issues associated with such a change given the other regulatory changes that are scheduled to take place in the mortgage market. … any change would be measured and gradual so as not to disrupt markets,” he said.
The conforming limit for one-unit residences currently stands at a baseline level of $417,000. In areas where 115 percent of the local median home value exceeds the $417,000 limit based on median home values based on estimates from the Federal Housing Administration, local limits up to $625,500 have been established.
DeMarco noted that any reduction to conforming limits would be across-the-board — not just in some parts of the country.
