Mortgage-Cap extension debates

The Wall Street Journal recently reported Democratic Rep. Barney Frank from Massachusetts believes that lobbying from the mortgage industry and a continued weak housing market are enabling Congress to preserve higher loan limits for Fannie Mae and Freddie Mac.

Frank, a member of the House Financial Services Committee, told the news source that he expects the Obama administration and some House Republicans to support keeping the maximum size of mortgages at a higher rate. On October 1, 2011, the loan limits for Fannie Mae and Freddie Mac are scheduled to drop from $729,750 to $625,500, making it more difficult for homebuyers seeking a large loan to obtain mortgages from the government-sponsored agencies.

Reps. John Campbell, Republican from California, and Gary Ackerman, Democrat from New York, believe the housing market is unstable and dropping the loan limits would increase fees for borrowers. They have introduced a bill to extend the loan-limit reduction for another two years, giving the market time to recover.

Ackerman told the news source that extending the loan limit will help qualified homebuyers obtain mortgages, while maintaining affordable and available home loans across the nation.

Realogy, a real estate and relocation service, recently announced that the company filed comments regarding the Dodd-Frank mortgage rules, which only consider home loans with a 20 percent down payment as a qualified residential mortgage.

Richard Smith, president and CEO of Realogy, said, "We believe the current QRM definition that includes a down payment requirement of 20 percent would create unduly credit standards and place homeownership out of reach for millions of potential buyers." 

More News