The National Association of Realtors challenged the Federal Housing Finance Agency’s authority to lower the maximum loan amounts for mortgages that Fannie Mae and Freddie Mac can purchase, The Wall Street Journal reported Sept. 19.
The FHFA announced that it was considering a reduction in the allowable loan limits, which currently are set at $417,000 for most of the country but as high as $625,000 in higher priced markets. While those limits generally are in tune with home prices, the FHFA did not change them when home prices dropped.
In a letter to the FHFA dated Sept. 17, NAR questioned the agency’s legal authority to drop loan limits without Congressional approval, the Journal reported.
NAR contended that decreasing loan limits could dampen the nation’s economic recovery if the private sector failed to fill in the gaps as hoped, particularly since jumbo loans generally require larger down payments and higher credit scores.
NAR further protested the increase in guarantee fees that Fannie and Freddie now charge, arguing that the fees are unnecessary in an improving housing market and only serve to increase borrowing costs without necessarily increasing private sector interest in the mortgage market.
Read NAR’s letter to FHFA.