Head of National Lender Supports GSE Loan Limit Raise in Letter to Congress
John Walsh, president of Total Mortgage Services LLC, has authored an open letter to members of the U.S. House of Representatives urging them to temporally raise the lending limits of the government-sponsored enterprises (GSEs) to $729,750 without delay and raise them nationwide not just in “high-cost areas.” Walsh believes this move would help put the nation's housing sector on the road to recovery and our economy on firmer footing. Walsh’s thesis is based on the five points, which are covered in detail in the letter: ►An estimated 17 percent of all mortgage loans in the U.S. fall between the conforming loan limit of $417,000 and the $729,750 temporary limit for “high-cost areas” that recently expired. Yet estimates from the U.S. Department of Housing & Urban Development (HUD) suggest that only three percent of all loans closed in 2010 were in this range and from these high-cost areas. ►There are few alternatives for borrowers nationwide needing a loan in this intermediate balance range. ►The lack of a single, higher lending limit across the country puts home values at greater risk, thereby increasing the risk to the GSEs and taxpayers. ►The reduction of jumbo lending is coming at a huge cost to the economy. ►While the temporary increase of GSE lending limits to $729,750 nationwide would technically increase the GSE’s retained risk, the net risk to the GSEs after the supportive aspects of the change are taken into account would be significantly diminished. Click here to view Walsh's letter to Congress in its entirety.