Lawmakers call for temporary extension of loan limit

Starting October 1, the loan limit on mortgages from Fannie Mae and Freddie Mac will drop from the current level of $729,750 back down to $625,500 - a level last seen before the limit was raised in response to the housing crisis. A group of 37 lawmakers recently sent a letter to the U.S. House of Representatives Appropriations Committee, calling for a temporary extension of the current loan limit level.

Led by Representatives Gary Ackerman, Democrat from New York, and John Campbell, Republican from California, the group stands in direct opposition to a recommendation in February from the U.S. Treasury Department instructing Congress not to pass new legislation extending the current limit, MarketWatch reported.

Opponents to the group [is this referring to the 37 lawmakers? if so, may want to specify] argue that a private market for mortgage securities in the jumbo loan price range will emerge naturally, without a need for a government guarantee. But Campbell believes the lowered limit will force borrowers to provide up to 50 percent down payments before being approved for a loan, the news source reported.

Another plan the federal government has proposed to boost the housing market is to rent out foreclosed properties in an effort eliminate the distressed properties that are clogging the housing market and driving home prices down. Investors.com reported that one suggestion is to make federal agencies the landlords over the rental properties, while experts argue selling the properties to private investors would have a stronger impact on the market.

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