Home Housing & Development Rep. Maloney Criticizes FHFA Proposal to Gradually Reduce Conforming Loan Limits

Rep. Maloney Criticizes FHFA Proposal to Gradually Reduce Conforming Loan Limits

WASHINGTON, DC – December 17, 2013 – (RealEstateRama) — Congresswoman Carolyn B. Maloney (NY-12) today criticized a Federal Housing Finance Agency (FHFA) proposal that could result in reduced access to mortgages for middle-class families. Maloney, the top Democrat on the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, says that reductions in conforming loan limits being considered by FHFA would cut thousands of families out of the housing market by forcing them to seek private mortgages, which typically require credit scores above 760 and average down payments of nearly 34 percent.

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“Reducing conforming loan limits, which are already low, could further weaken the housing recovery,” said Maloney. “Home prices are on the rise and the housing market is slowly recovering, but mortgage lending is still tighter than ever. Reducing conforming loan limits now or in the near future could hurt middle class families who are struggling to qualify for federally-backed mortgages in high cost real estate markets. I have questioned FHFA’s legal authority to take this action, and will continue making the case against it.”

On October 10, Maloney and 66 of her colleagues sent a letter to FHFA’s Acting Director Ed DeMarco challenging his economic rationale and the agency’s legal authority to reduce conforming loan limits. FHFA then announced that the statutory loan limits would be maintained for 2014, and found that higher limits were appropriate in an additional 18 high cost counties across the country.

The current conforming loan limit is set at $417,000 in the continental United States and $625,000 in high-cost areas like the New York metropolitan area. The proposal would reduce limits to $400,000 and $600,000 respectively.

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