Congress has voted to extend higher loan limits for the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Approved by the U.S. House of Representatives and Senate, President Barack Obama is expected to sign the initiative into law that would keep a ceiling of $729,750 for single-family home mortgages in high-cost areas other than Hawaii and Alaska in place until October 2011.
The Senate approved the measure by a vote of 69-30 on Wednesday. The bill, HR 3081: Department of State, Foreign Operations, and Related Programs Appropriations Act of 2010, would extend the current conforming loan limits through the new fiscal year and provide the Federal Housing Administration’s (FHA) multifamily programs with additional commitment authority by providing $20 billion in loan commitment authority for FHA’s General and Special Risk Insurance Funds.
“Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy," said Robert E. Story Jr., CMB, chairman of the Mortgage Bankers Association (MBA). "The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage."
The loan limit cap was set to drop to $625,500 at the start of fiscal year 2011. The passage of HR 3081 will further prolong the higher limit and keep interest rates low in order to boost the homebuying market.
“Likewise, providing the FHA with additional multifamily commitment authority will help ensure funding for the continued development, renovation and mortgage refinancing necessary to preserve affordable rental housing in this country," said Story. "This sector has been crucial during the recent housing downturn and credit crisis, and FHA needs the additional authority in order to ensure the market remains liquid."
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