Legislation was approved by both the House and Senate Thursday that extends the higher loan limits currently in place for mortgages backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).
Lawmakers temporarily raised the limits for these federally-funded home loans back in 2008 as part of a national economic stimulus package, to $729,750 for high-cost areas. But that increase was set to expire at the end of this year, dropping the size of loans eligible for GSE and FHA funding to $625,500. The new measure stretches the run for the higher loan limit through December 31, 2010. Industry trade groups have touted the elevated loan limits as a key component to a housing, and greater economic, recovery in their lobbying for an extension.
Upon news of the loan limit extension, the chairman of the Mortgage Bankers Association (MBA), Robert E. Story, Jr., said, “Given the lack of a private secondary mortgage market, FHA, Fannie Mae, and Freddie Mac are pretty much the only game in town. Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers.”
The higher loan limit measure was attached to a budget and appropriations bill that was approved by the House with a vote of 247-178 and passed by the Senate just hours later, 72-28.