Here’s One Group That’s Backing Lower Loan Limits


Fannie Mae and Freddie Mac should at least marginally reduce loan limits to reduce the governments dominance of the mortgage market, according to the American Securitization Forum.

While some argue that the economic recovery has been too fragile to disrupt the GSEs market share, ASF views the GSEs vise grip on the mortgage finance market as preventing private capital from re-entering the market, said Tom Deutsch, ASF executive director, in a letter sent to the Federal Housing Finance Agency.

Marginally reducing conventional conforming limits to $400,000 would have pushed no more than 2% of the 8.6 million mortgages originated in the U.S. in 2012 out of the GSE market and into non-taxpayer hands that would take the credit risk of those loans, he said. That would hardly have disrupted the housing recovery or hurt middle-class Americans taking out an average loan of $200,000.

Other mortgage trade groups have opposed the lowering of loan limits and the FHFAs power to do so.

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