Bernanke stands behind lowering the mortgage limits

Charmain of the Federal Reserve, Ben Bernanke, told a Congressional Committee recently that while lowering the mortgage limits might raise the cost of home ownership, it is a trade-off between supporting high priced homes and removing the high limits implemented at the height of the housing crisis.

CNBC reported that there is debate as to what effect the proposed drop in mortgage loan limits from $729,750 to $625,500 will have on the market. While homebuilders fear it will be catastrophic, economists predict it will have little effect.

U.S. Senator Jon Tester, Democrat from Montana, questioned Bernanke during a Senate Banking Committee hearing on the status of the housing market, saying that mortgage loan providers have made the problems in the market worse. Tester cited robo-signing of foreclosure documents, servicers selling mortages they did not own and providers failing to contact consumers as examples of the banks' misconduct.

"The result has been, in my state, that some folks are being foreclosed on without good reason," Tester told Bernanke. "That kind of attitude is not healthy for our recovery and it's not going to cut it."

Tester argued that lawmakers must make the loan providers who received bailout money accountable to the American public. 

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