A decision to restore the $729,750 maximum loan limit on government-backed loans likely will be made by House and Senate leaders — and not the appropriators, according to industry sources following the issue.
A deal may come at the “last minute,” according to these officials, as House and Senate appropriators wrap up negotiations on three bills — including a HUD appropriations bill — before the upcoming Nov. 11 Veterans Day break.
“Hill sources tell us that the issue of whether to restore the higher conforming mortgage loan limits that lapsed on October 1 will be decided last minute,” said Charles Gabriel, president of Capital Alpha Partners.
This gives Realtors, homebuilders and other mortgage-related groups a few more days to lobby members of Congress to raise the maximum loan limit from the current $625,000 to $729,750 for up to two more years.
One industry lobbyist said a loan limit increase would probably be jettisoned if left to the appropriators. He expects the issue will come down to a trade off between Senate majority leader Harry Reid, D-Nev., and House Speaker John Boehner, R-Ohio.
Sen. Reid appears to have the stronger hand since the Senate voted 60-38 to approve an amendment by Senators Robert Menendez, D-N.J. and Johnny Isakson, R-Ga., to roll back the October 1 reductions on Fannie Mae, Freddie Mac and FHA loan limits.
Accepting the Menendez-Isakson amendment would a big concession for House GOP leaders who are adamant about reducing the GSEs’ share of the mortgage market. But House Republican leaders also recognize that even conservative Republicans are divided over the loan limit issue.
One possible compromise would be to maintain the maximum loan limit at $625,500 in high cost areas while increasing the floor in lower cost areas to 125% of the median house price from the current 115%. Such a move would raise the Federal Housing Administration loan limit in nearly 600 counties in 42 states.
This option has “obvious allure” and would “substantially address the housing and mortgage industries’ concerns while allowing the House GOP to somewhat save face,” Gabriel said.
Daily Briefing | Friday, November 4, 2011
Job Losses in the Mortgage Industry Begin to Ebb
Mortgage companies pared their payrolls by just 300 full-time employees in September, compared to 3,400 cuts the prior month, according to new government figures released Friday morning.
HAMP Mods Rise Nicely, Including Principal Reductions
Residential servicers completed nearly 40,150 HAMP modifications in September, a 60% improvement from August, according to figures released by the U.S. Treasury Department.
Genworth’s Loss Halved
The U.S. mortgage insurance business at Genworth Financial Inc., Richmond, Va., nearly halved its year-over-year loss in the third quarter as new flow delinquencies declined 14% from the previous year and new insurance written was up by 13% in the same timeframe.
Ranieri’s Selene Hires Litton and Other Top Managers
Selene Finance, a specialty servicer/loan modification company controlled by Lewis Ranieri, has hired Larry Litton Jr., and a handful of top managers from Litton Loan Servicing, Houston, according to servicing executives that have done business with the firm.
Redwood Sees Big Earnings Drop but Jumbo Production Spikes
Redwood Trust, the only firm to publicly issue jumbo MBS the past two years, earned just $1 million in the third quarter, but its acquisition of nonconforming product in the secondary market jumped by 166%.
AIG Posts Small Loss
American International Group, New York, reported a net loss of $4.1 million, which includes a $931 million decline in the fair market value of AIG’s holdings in Maiden Lane III and a $43 million decline in the fair market value of its subsidiary SunAmerica’s holdings in Maiden Lane II.
LPS Wins Court Battle Against FDIC in WaMu Appraisal Case
U.S. District Court for the Central District of California Thursday dismissed a civil claim filed against Lender Processing Services by the Federal Deposit Insurance Corp., which accused the mortgage vendor of gross negligence in appraisals conducted for the now defunct Washington Mutual, Seattle.
Another Protest to Draw Attention to Foreclosure Impact
The outcry against the financial sector has taken yet another turn, this time with a petition calling on the Minneapolis School Board to move its payroll and other accounts from Wells Fargo to a local community bank as a way to highlight the connection between foreclosures and local school systems.
Fincen Plan Requires GSEs to Develop Anti-Money Laundering Procedures
A proposal from the Financial Crimes Enforcement Network would require Fannie Mae and Freddie Mac to develop their own anti-money laundering programs as part of an ongoing effort to combat mortgage fraud.