The elevated conforming loan limits for mortgages guaranteed or insured by the government will expire on October 1, 2011, but another chance to extend them will come later this year, according to a report in the HousingWire.
Congress raised the limit to as high as $729,750 in 2008 as the private market froze and financing for larger mortgages became unavailable. On October 1, these limits will expire and drop to $625,500 in the most expensive areas, mostly affecting the West and East Coasts. According to Standard & Poor's, there are approximately 110,000 nonconforming mortgages in the nation between $625,500 and $729,750—about 2% of total jumbos.
A spokesman for Rep. John Campbell (R-Calif.) stated, "We are focusing all of our effort and attention on making sure that a temporary extension of the current conforming loan limits is included in an omnibus spending bill that it appears the House and Senate will consider late this year."
Another staffer confirmed that top leadership in the House had been trying to work the conforming loan limits into the spending bill ahead of the October 1 deadline. Such a route had to come from the House, the staffer said. Yet another staffer told HousingWire that the odds of getting an extension after the limits expire were very long.
Industry trade groups pushed hard this past week, urging lawmakers to extend the limits at a time when the housing market is still fragile.
"We expect to see significant negative consequences for the struggling housing market as a result of the limit drop after October 1," Campbell's office said. "Therefore, it will be even more pressing and pertinent that Congress acts quickly to reverse the limit reduction at the next opportunity."
If there are any questions, please contact Keith McNamara, CATIC's Director of Industry Relations.