Plans to Reduce Conforming Loan Limits Under Heavy Fire from Industry Groups, Congress

October 9, 2013

Pressure appears to be building on the Federal Housing Finance Agency’s (FHFA) acting director to back down or at least delay an intended reduction in conforming loan limits for Fannie Mae and Freddie Mac (the GSEs). In August Edward J. DeMarco announced plans to scale back existing limits on the size of conventional loans that can be purchased by the GSEs. The current limit is $417,000 with exceptions for counties deemed to have high cost housing where the limit is as high as $625,000. DeMarco proposed a gradual reduction as one mechanism to encourage the return of private money to the mortgage market and to reduce the government’s housing finance footprint.